Time Warner Cable Business Class, a division of
Time Warner Cable
), is all set to launch cloud based Software as a Service (SaaS),
which will provide secure and cost effective software and
communication solutions to small and medium business enterprises
(SMBs). We believe this latest offering from Time Warner Cable is
targeting the online software service business of the lucrative
This cloud based solution will offer SMBs with a software
infrastructure capable of supporting large enterprises and will
help eliminate the cost and complexities of owning and managing
their own equipment and employees.
Some of the notable benefits of this service are that it
provides access to e-mail, contact lists and important documents
on multiple devices including PC, smartphones and tablets in
addition to providing round the clock customer services. Large
size of IT infrastructure is an added advantage as it allows
flexibility to businesses to adapt to changing needs.
Cloud based services business has been on the growth path for
quite some time as it significantly reduces the operational cost
of enterprises by providing secure and affordable data management
solutions, thereby enhancing business productivity. To tap this
market, Time Warner has acquired cloud services provider Navisite
for $230 million in February 2011.
The Business Segment has become a major growth driver for Time
Warner Cable. In the second quarter 2012, Business Service
Segment generated revenue of $464 million, up 28.5% year over
year. Arch rival
) business service revenue in the second quarter of 2012 has
shown a growth of 34.2%.
We believe Time Warner is betting on SMBs to tap this latest
service as it will reduce their IT spending, which in turn will
further pump up the cable operator's business service revenue.
Furthermore, it will allow Time Warner to compensate its market
share loss from telecom carriers like
Verizon Communications Inc.
AT&T Inc. (
) in the cable and broadband
We maintain our long-term Neutral recommendation on Time
Warner Cable. The company also retains a Zacks #3 Rank, implying
a short-term Hold rating.
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