Time Warner Cable Inc. ( TWC ) reported its
first-quarter 2013 financial results, where the bottom line beat
the Zacks Consensus Estimate while the top line missed the same.
Despite the beat, the company lost a major share of video
subscribers in the reported quarter.
Quarterly adjusted (excluding special items) earnings per share
of $1.41 beat the Zacks Consensus Estimate of $1.38. Quarterly GAAP
net income was $401 million or $1.34 per share against $382 million
or $1.20 per share in the prior-year quarter.
At $5,475 million, quarterly total revenue fell short of the
Zacks Consensus Estimate of $5,488 million, but was up 6.6% year
over year. The growth in revenues was mainly attributed to improved
advertising sales, strong high-speed data revenue growth and
successful integration of Insight Communications.
Quarterly adjusted operating income before depreciation and
amortization (OIBDA) climbed 2.1% year over year to $1,912 million.
GAAP operating income grew 1.7% year over year to $1,060 million.
During the first quarter of 2013, Time Warner Cable repurchased 7.1
million shares for $660 million and also paid $195 million in
During the reported quarter, Time Warner Cable generated $1,394
million of cash from operations compared with $1,383 million in the
prior-year period. Free cash flow in the first quarter of 2013 was
$624 million compared with $677 million in the year-ago
At the end of the first quarter of 2013, Time Warner Cable had
$3,268 million in cash and marketable securities compared with
$3,454 million at the end of 2012. Long-term debt at the end of the
reported quarter was $24,248 million against $25,171 million at the
end of 2012. At the end of the first quarter of 2013, the
debt-to-capitalization ratio was 0.78 compared with 0.77 at the end
Residential Services Segment
Quarterly total revenue was $4,611 million, up 4% year over
year. Within the segment, video revenues were $2,671 million, down
1.5% year over year. High-speed data revenues were $1,406 million,
up 17.3% year over year. Voice revenues were $519 million, up 2.2%
year over year. Other revenues were $15 million, flat year over
Business Services Segment
Quarterly revenues were $537 million, up 25.2% year over year.
Within the segment, video revenues were $84 million, up 10.5% year
over year. High-speed data revenues were $256 million, up 23.1%
year over year. Voice revenues were $96 million, up by a
substantial 52.4% year over year. Wholesale transport revenues were
$55 million, up 34.1% year over year. Other revenues were $46
million, up 12.2% year over year.
Advertising revenues surged 8.1% year over year to $228
Other revenues came in at $99 million, up 62.3% year over
At the end of first quarter of fiscal 2013, Residential Video
subscribers' base was 11.911 million. Time Warner Cable lost
119,000 residential video subscribers in the reported quarter.
Commercial Video subscribers' base was 189,000. Residential
High-speed Data subscribers' base was 11.066 million.
Time Warner Cable added 131,000 residential High-Speed Data
subscribers. Commercial High-speed Data subscribers' base was
472,000. The company also added 12,000 commercial High-speed Data
subscribers. Residential voice subscribers' base was 4.989 million.
Commercial voice subscribers' base was 237,000. Time Warner Cable
also gained 13,000 commercial voice subscribers.
In the first quarter, Time Warner Cable lost 35,000 Triple play
subscribers totaling 4.259 million, gained 38,000 Double play
subscribers totaling 5.074 million, and also gained 32,000 Single
play subscribers totaling 5.939 million.
We believe that Time Warner Cable will benefit from the launch
of popular sports channels in the U.S. market, going forward. Of
late, sports entertainment has become a lucrative source of
revenues for the cable MSO's. So, Time Warner Cable sold the
distribution rights to DirecTV ( DTV ) and
AT&T Inc. 's ( T ) U-Verse, thereby
boosting its top line.
Additionally, the second-largest cable MSO is also planning to
hike its rates on the back of multiple deals with different sports
majors like Los Angeles Galaxy, Los Angeles Sparks, Los Angeles
Lakers and Los Angeles Dodgers.
However, losing residential video subscribers concerns Time
Warner Cable as customers are opting for cheaper video streaming
service providers like Netflix Inc. ( NFLX ), Hulu.Com and
Time Warner Cable currently carries a Zacks Rank #3 (Hold).DIRECTV (DTV): Free Stock Analysis ReportNETFLIX INC (NFLX): Free Stock Analysis ReportAT&T INC (T): Free Stock Analysis ReportTIME WARNER CAB (TWC): Free Stock Analysis
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