On Jan 3, we maintained our Neutral recommendation on
Liberty Global Inc.
). The company reported mixed financial results for the third
quarter of 2013. The bottom line outpaced the Zacks Consensus
Estimate but the top line missed the same.
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Why the Reiteration?
Going ahead, we believe Liberty Global's revenues will continue
to benefit from a 'triple play' of video, broadband and
telephone, as it signs up more "bundled" customers in Europe and
To improve liquidity, Liberty Global agreed to sell its
international content business, Chellomedia, to AMC Networks Inc.
for nearly $1 billion. Liberty Global launched a hybrid IP video
gateway called "Horizon TV" in almost five countries. The new
web-based hybrid modem includes an open software developer
platform and application store. Such value-added services will
continue to drive subscriber growth for the company going
Despite being the largest global pay-TV operator, its continuous
acquisitions may led to integration risks and a highly leveraged
balance sheet. The company predominantly operates in Europe,
which at present is economically the most vulnerable. Ongoing
debt crisis in several European countries may significantly
affect the future prospect of Liberty Global.
Several European broadband service providers are gradually
deploying high-speed DSL and Fiber-to-the-Home networks, making
the industry extremely competitive. In addition, we expect more
cash-strapped consumers to downsize existing services, resulting
in churn in the subscriber base.
Meanwhile, the stock price has soared more than 41.9% over the
last year and is currently trading at a 52-week high end.
Liberty Global currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks to consider in the Business Software & Services
Liberty Media Corp.
Verizon Communication Inc.
). All three carry a Zacks Rank #2 (Buy).