Rogers Misses on Earnings, Beats Revs - Analyst Blog

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Rogers Communications Inc. ( RCI ) declared mixed fourth-quarter 2013 financial results, wherein its bottom line missed the Zacks Consensus Estimate but the top line outpaced the same. Moreover, sluggish subscriber growth and a slowdown in smartphone subscriber addition have resulted in a 5.13% (equal to $2.13) fall in the stock price.

Quarterly net income was $345.5 million or 66 cents per share compared with $433.5 million or 83 cents in the year-ago quarter. However, the adjusted EPS of 60 cents significantly missed the Zacks Consensus Estimate of 68 cents. Quarterly total revenue stood at $3,138.3 million, down 1% year over year, but above the Zacks Consensus Estimate of $2,992 million.

Fourth-quarter operating profit came in at $1,129.3 million, down 1% year over year. Quarterly operating margin was 36% compared with 36.1% in the year-ago quarter.

During the fourth quarter of 2013, Rogers Communications generated $1,037.4 million of cash from operations compared with $646.4 million in the year-ago quarter. Free cash flow was $357.1 million against a negative cash flow of $37.7 million in the year- earlier quarter.

At the end of fourth-quarter fiscal 2013, Rogers Communications had $2,226.7 million of cash and marketable securities on its balance sheet as compared with $206.1 million at the end of fiscal 2012. Total outstanding debt stood at $11,779.8 million versus $10,103.8 million at the end of fiscal 2012. The debt-to-capitalization ratio was 0.72 compared with 0.73 at the end of fiscal 2012.

Wireless Segment

Quarterly total revenue was $1,791.2 million, down 4% year over year. Network revenues were $1,615.1 million, down 2% from the year-ago quarter. Equipment sales were $176.1 million, down 13% year over year.

Quarterly adjusted operating profit for the entire segment was $673.5 million, up 1% year over year. Adjusted operating margin was 37.6%, in the fourth quarter of 2013, compared with 35.8% in the year-ago quarter. In the same time frame, Wireless Data revenues were $798.4 million, up 13% year over year. Wireless Data revenues represented around 49% of the total wireless network revenue against 42% in the prior-year quarter.

During the fourth quarter of 2013, the Wireless segment activated 790,000 smartphones against 940,000 in the prior-year quarter. Most of the smartphones were either Apple Inc. 's ( AAPL ) iPhones, Black Berry Ltd. 's ( BBRY ) BlackBerry or Google Inc. ( GOOG ) developed Android handsets. Quarterly consolidated ARPU (average revenue per user) or Blended ARPU was $56.7, down 3.1% year over year.

During the reported quarter, Postpaid retail subscribers base stood at 8.074 million, up 2.9% year over year. Smartphone customers constituted a record 75% of the overall postpaid subscribers as against 69% in the year-ago quarter. Quarterly Postpaid ARPU was $64.2, down 4.9% year over year. Monthly churn rate stood at 1.34% versus 1.4% in the prior-year quarter.

Prepaid subscriber base totaled 1.429 million, down 162% from the year-ago quarter. Quarterly Prepaid ARPU was $14.98, down 2.1% year over year. Monthly churn rate was 3.41% against 3.77% in the prior-year quarter.

Cable Segment

Quarterly total revenue came in at $842.9 million, up 2% year over year. Basic cable operations revenues were $427.7 million, down 4% from the year-ago quarter. Internet revenues were $291.3 million, up 14% year over year. Home Telephony revenues were $121 million, up 2% year over year. Quarterly adjusted operating profit for the whole segment was $419 million, up 3% year over year. Adjusted operating margin stood at 49.7%, in the reported quarter, compared with 49.4% in the year-ago quarter.

At the end of fourth-quarter fiscal 2013, Cable TV subscriber base stood at 3.978 million, up 4.4% year over year. High-speed Internet subscriber base was 1.96 million, up 5.2% year over year. Digital cable subscriber base now constituted 84% of the total television subscriber base compared with 80% in the year-ago quarter.

Media Segment

Quarterly total revenue came in at $438.4 million, up 4% year over year. Quarterly adjusted operating profit was $47.4 million, down 35% year over year. Adjusted operating margin was 10.8%, in the reported quarter, compared with 17.3% in the year-ago quarter.

RBS Segment

Quarterly total revenue was $94.8 million, up 11% year over year. Quarterly adjusted operating profit was $28.1 million, up 7% from the prior-year quarter. Adjusted operating margin was 29.6%, in the reported quarter, compared with 30.7% in the year-ago quarter.

Outlook

Rogers expects adjusted operating profit for full-year fiscal 2014 to be in the range of $4,838.5-$4,983.7 million. The company also expects after-tax free cash flow to be between $1,379 million and $1,451.6 million while capital expenditure for the full year is expected to range from $2,201.5-$2,298.3 million.

Currently, Rogers Communications has a Zacks Rank #4 (Sell).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAPL , BBRY , GOOG , RCI

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