Time Warner Cable Inc.
) reported robust second-quarter 2012 financial results, with both
the top line and the bottom line beating the Zacks Consensus
The solid performance was mainly buoyed by: (1) newly acquired
entities, e.g. Insight, NewWave, and NeviSite enhanced the
company's overall financials. Moreover, growth rate of revenue
exceeds the growth rate of operating expenses (2) increasing demand
for residential high-speed Internet services, and (3) continuation
of strong performance of the company's Business Services
Quarterly GAAP net income was $452 million or $1.43 per share,
compared with net income of $420 million or $1.24 per share in the
prior-year quarter. Second-quarter 2012 adjusted (excluding special
items) earnings per share of $1.48 handily beat the Zacks Consensus
Estimate of $1.38.
Total revenue in the reported quarter increased 9.3% year over
year to $5,404 million, surpassing the Zacks Consensus Estimate of
Quarterly adjusted operating income before depreciation and
amortization (OIBDA) climbed 10.3% year over year to $2,011
million. GAAP operating income grew 9.6% year over year to $1,990
million. During the second quarter of 2012, Time Warner Cable
repurchased 5.6 million shares for a total consideration of $440
million. In the reported quarter, the company also paid $177
million in dividends.
During the first half of 2012, Time Warner Cable generated
$2,920 million of cash from operations, compared with $3,080
million in the prior-year period. Free cash flow in the first half
was $1,520 million compared with $1,717 million in the year-ago
At the end of the second quarter of 2012, Time Warner Cable had
$3,226 million in cash & marketable securities compared with
$5,177 million at the end of 2011. Total debt at the end of the
reported quarter was $27,236 million compared with $24,320 million
at the end of 2011. At the end of the second quarter of 2012,
debt-to-capitalization ratio was 0.78 compared with 0.76 at the end
Residential Services Segment
Quarterly total revenue was $4,617 million, up 7.4% year over
year. Within the segment, video revenue was $2,797 million, up 4.5%
year over year. High-speed data revenue was $1,266 million, up
13.5% year over year. Voice revenue was $539 million, up 8.5% year
over year. Other revenue was $15 million, up 25% year over
Business Services Segment
Quarterly revenue was $464 million, up 28.5% year over year.
Within the segment, video revenue was $81 million, up 15.7% year
over year. High-speed data revenue was $224 million, up 26.6% year
over year. Voice revenue was $73 million, up by a substantial 58.7%
year over year. Wholesale transport revenue was $44 million, up
12.8% year over year. Other revenue was $42 million, up 44.8% year
Advertising revenue increased 17.8% year over year to $265
Other revenue was $58 million, remaining the same year over
At the end of the second quarter of 2012, Residential Video
subscribers' base was 12.299 million. Time Warner Cable lost
169,000 residential video subscribers in the previous quarter.
Commercial Video subscribers' base was 185,000. Residential
High-speed Data subscribers' base was 10.775 million.
Time Warner Cable added 59,000 residential High-Speed Data
subscribers. Commercial High-speed Data subscribers' base was
433,000. The company also added 13,000 commercial High-speed Data
Residential voice subscribers' base was 4.990 million. Time
Warner Cable added 45, 000 residential voice subscribers.
Commercial voice subscribers' base was 198,000. The company added
14,000 commercial voice subscribers.
In the previous quarter, Time Warner Cable gained 54,000 Triple
Play subscribers totaling 4.244 million, lost 85,000 Double Play
subscribers totaling 5.099 million, and also lost 30,000 Single
Play subscribers totaling 5.950 million.
), Time Warner Cable is the second largest cable multiple-service
operator (MSO) in the U.S. We reiterate our long-term Neutral
recommendation on Time Warner Cable. Currently, the company enjoys
a Zacks #3 Rank (Hold) on the stock.
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