Time Warner Inc.
) is slated to release its second-quarter 2012 financial results on
Wednesday, August 1, 2012.
The current Zacks Consensus Estimate for a profit of 58 cents a
share for the quarter reflects a year-over-year decline of 3% from
60 cents reported in the comparable prior-year quarter. The
estimates in the current Zacks Consensus range from a low of 57
cent to a high of 62 cents a share. The Zacks Consensus revenue
estimate stands at $6,975 million for the second quarter.
Recap of the First Quarter
Time Warner posted better-than-expected first-quarter 2012
results. Quarterly earnings of 67 cents per share beat the Zacks
Consensus Estimate of 64 cents, and surged 16% from 58 cents per
share posted in the prior-year quarter, reflecting higher adjusted
operating income across Networks, and Film and TV Entertainment
(earlier Filmed Entertainment) segments.
Total revenue in the quarter grew 4% year over year to $6,979
million on the back of growth registered in the Networks, and Film
and TV Entertainment segments. The reported revenue also handily
beat the Zacks Consensus Estimate of $6,809 million.
Time Warner reiterated its low double-digit growth expectation
for fiscal 2012 earnings per share.
Zacks Agreement & Magnitude
For to-be-reported quarter, out of 23 estimates, 1 and 12
estimates went down over the last 7 and 30 days, respectively,
whereas only one estimate was revised upward in the last 30 days.
For fiscal 2012, out of 27 estimates, six estimates were trimmed in
the last 30 days, whereas three estimates went up over the same
period. No changes were noticed over the last 7 days.
For the second-quarter, the estimates remain unchanged in the
last 7 days while the estimates fell by a couple of cents in the
last 30 days.
The downward revision in the estimates reflects the decline in
advertising and subscription revenue on account of reduced domestic
and international newsstand revenues. Time Warner derives a major
portion of its revenue from advertising and the analysts fail to
observe any near-term catalysts for advertising revenue. As a
result, most of the estimates were revised downwards for the
Positive Earnings Surprise History
With respect to earnings surprise, Time Warner has topped the
Zacks Consensus Estimate over the last four quarters with an
average of 6.3%.
The company has been expanding its digital presence to
facilitate consumers to enjoy contents in more platforms and
devices. Time Warner enhanced the reach of HBO GO streaming service
to mobile devices and entered into a deal with Apple so that the
print subscribers of Time, Fortune and Sports Illustrated may
access the iPad editions of these magazines at no additional
Moreover, Warner Bros. became the first movie studio to offer
video on demand, and acquired Flixster, a movie search application
on smartphones and mobile devices.
Time Warner's significant international presence has helped
broaden its client base and product portfolio. Time Warner operates
in the United Kingdom, Germany, Canada, France, Japan and other
countries apart from the United States. We believe that its strong
international exposure will drive growth in the coming
Even though Time Warner's international presence helps to widen
its customer base among other positives, fluctuations in currency
exchange rates can adversely impact the company's international
Moreover, Time Warner faces stiff competition across its
different segments with
Walt Disney Company
), who always look to grab market share by offering lower prices,
new services or services that are different from those offered by
Currently, Time Warner carries a Zacks #3 Rank implying
short-term Hold rating and correlates with our long-term Neutral
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