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Competition, growing joblessness hurting business
By Kelly Riddell
Bloomberg News
Published on Friday, Nov 06, 2009
Time Warner Cable Inc., the second-largest U.S. cable-television operator, posted an 11 percent drop in profit as intensifying competition and increasing unemployment hurt its efforts to win subscribers.
Third-quarter net income fell to $268 million, or 76 cents a share, said the New York company that is the parent of Akron-based Time Warner Northeast Ohio, its third-largest business unit.
Profit, excluding some costs, was 80 cents a share. Analysts projected 76 cents, according to the average estimate in a Bloomberg News survey. Sales advanced 3.6 percent to $4.5 billion.
Time Warner Cable added 117,000 customers, compared with the 155,000 estimate of Chris Marangi, an analyst at Gabelli & Co.
Rising unemployment rates and sluggish new home construction are deterring subscribers from purchasing additional services. The company also faces competition from satellite TV operators and phone companies.
''There may be some economic-related softness in Time Warner Cable's urban markets,'' Marangi said. ''You may have some people leaving the market, perhaps some down-tiering, and cord-cutting on the phone side.''
Through lower capital spending and higher subscriber sales, the company boosted an accounting measure called free cash flow by 3.8 percent to $465 million. The financial performance offset disappointing customer gains, said Marci Ryvicker, an analyst at Wells Fargo Advisors LLC.
''The company is clearly containing costs, which helped the bottom line,'' Ryvicker said.
Time Warner Cable, which trails only Comcast Corp. in cable subscribers, rose 92 cents to $40.97 in Thursday trading. Assuming reinvested dividends, shares have gained 60 percent this year.
Time Warner Cable cut its capital spending by 11 percent in the first nine months of 2009, compared with the same period a year ago. The company said it reduced expenditures for customer equipment, such as set-top boxes, network upgrades, rebuilds and line extensions.
In addition, Time Warner Cable has preserved its prices by offering fewer promotions. Revenue from subscribers increased 4.9 percent to $4.32 billion in the quarter.
Analysts predicted sales of $4.47 billion. Net income a year earlier was $301 million, or 92 cents a share.
Time Warner Cable will meet or beat its forecast for 2009 earnings, excluding expenses such as restructuring costs, of $3 a share, Chief Financial Officer Rob Marcus said on a conference call. Analysts predict $3.06 on average.
Time Warner Cable Inc., the second-largest U.S. cable-television operator, posted an 11 percent drop in profit as intensifying competition and increasing unemployment hurt its efforts to win subscribers.
Third-quarter net income fell to $268 million, or 76 cents a share, said the New York company that is the parent of Akron-based Time Warner Northeast Ohio, its third-largest business unit.
Profit, excluding some costs, was 80 cents a share. Analysts projected 76 cents, according to the average estimate in a Bloomberg News survey. Sales advanced 3.6 percent to $4.5 billion.
Time Warner Cable added 117,000 customers, compared with the 155,000 estimate of Chris Marangi, an analyst at Gabelli & Co.
Rising unemployment rates and sluggish new home construction are deterring subscribers from purchasing additional services. The company also faces competition from satellite TV operators and phone companies.
''There may be some economic-related softness in Time Warner Cable's urban markets,'' Marangi said. ''You may have some people leaving the market, perhaps some down-tiering, and cord-cutting on the phone side.''
Through lower capital spending and higher subscriber sales, the company boosted an accounting measure called free cash flow by 3.8 percent to $465 million. The financial performance offset disappointing customer gains, said Marci Ryvicker, an analyst at Wells Fargo Advisors LLC.
''The company is clearly containing costs, which helped the bottom line,'' Ryvicker said.
Time Warner Cable, which trails only Comcast Corp. in cable subscribers, rose 92 cents to $40.97 in Thursday trading. Assuming reinvested dividends, shares have gained 60 percent this year.
Time Warner Cable cut its capital spending by 11 percent in the first nine months of 2009, compared with the same period a year ago. The company said it reduced expenditures for customer equipment, such as set-top boxes, network upgrades, rebuilds and line extensions.
In addition, Time Warner Cable has preserved its prices by offering fewer promotions. Revenue from subscribers increased 4.9 percent to $4.32 billion in the quarter.
Analysts predicted sales of $4.47 billion. Net income a year earlier was $301 million, or 92 cents a share.
Time Warner Cable will meet or beat its forecast for 2009 earnings, excluding expenses such as restructuring costs, of $3 a share, Chief Financial Officer Rob Marcus said on a conference call. Analysts predict $3.06 on average.
Comments
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Akron, OH
Posted 10:07 AM, 11/06/2009
Here come the price hikes!
wads, OH
Posted 12:49 PM, 11/06/2009
maybe the drop is because people like myself, and others in our family have changed to either satellite or U-verse...ONLY BECAUSE OF CRAPPY CUSTOMER SERVICE!! it stinks..and i don't want someone named "mike" in india telling me they can get out in about a week...
