Time Warner Cable Inc.
) reported third-quarter 2012 financial results, where the bottom
line met the Zacks Consensus Estimate while the top line missed
Quarterly GAAP net income was $808 million or $2.60 per share
against $356 million or $1.08 per share in the prior-year
quarter. The outperformance was mainly attributable to improved
advertising sales, strong high-speed data revenue growth and
increase in other income. However, third-quarter 2012 adjusted
(excluding special items) earnings per share of $1.41 came in
line with the Zacks Consensus Estimate. Total revenue in the
reported quarter increased 9.2% year over year to $5,363 million,
missing the Zacks Consensus Estimate of $5,387 million.
Quarterly adjusted operating income before depreciation and
amortization (OIBDA) climbed 9.2% year over year to $1,946
million. GAAP operating income grew 9.2% year over year to $1,094
million. During the third quarter of 2012, Time Warner Cable
repurchased 5.7 million shares for a total consideration of $500
million. In the reported quarter, the company also paid $173
million in dividends.
During the reported quarter, Time Warner Cable generated
$1,195 million of cash from operations compared with $1,264
million in the prior-year period. Free cash flow in the third
quarter of 2012 was $423 million compared with $613 million in
the year-ago quarter.
At the end of the third quarter of 2012, Time Warner Cable had
$3,853 million in cash and marketable securities compared with
$5,177 million at the end of 2011. Total debt at the end of the
reported quarter was $25,187 million compared with $24,320
million at the end of 2011. At the end of the first nine months
of 2012, debt-to-capitalization ratio was 0.77 compared with 0.76
at the end of 2011.
Residential Services Segment
Quarterly total revenue was $4,548 million, up 7% year over
year. Within the segment, video revenue was $2,722 million, up
3.7% year over year. High-speed data revenue was $1,279 million,
up 14.3% year over year. Voice revenue was $530 million, up 7.3%
year over year. Other revenue was $17 million, up 30.8% year over
Business Services Segment
Quarterly revenue was $493 million, up 27.4% year over year.
Within the segment, video revenue was $83 million, up 13.7% year
over year. High-speed data revenue was $235 million, up 25.7%
year over year. Voice revenue was $83 million, up by a
substantial 59.6% year over year. Wholesale transport revenue was
$47 million, up 20.5% year over year. Other revenue was $45
million, up 25% year over year.
Advertising revenue surged 22.2% year over year to $264
Other revenue was $58 million, remaining same year over
At the end of the third quarter of 2012, Residential Video
subscribers' base was 12.159 million. Time Warner Cable lost
140,000 residential video subscribers in the previous quarter.
Commercial Video subscribers' base was 185,000. Residential
High-speed Data subscribers' base was 10.860 million. Time Warner
Cable added 85,000 residential High-Speed Data subscribers.
Commercial High-speed Data subscribers' base was 446,000. The
company also added 13,000 commercial High-speed Data subscribers.
Residential voice subscribers' base was 4.990 million. Commercial
voice subscribers' base was 212,000. The company added 14,000
commercial voice subscribers.
In the previous quarter, Time Warner Cable gained 14,000
Triple play subscribers totaling 4.258 million, lost 29,000
Double play subscribers totaling 5.07 million, and also lost
14,000 Single play subscribers totaling 5.936 million.
), Time Warner Cable is the second largest cable MSO in the U.S.
We reiterate our long-term Neutral recommendation on Time Warner
Cable. Currently, the company enjoys a Zacks #2 Rank (Buy) on the
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