Time Warner Cable Profit Climbs 18% As Broadband Grows
04/26/2012| 08:36am US/Eastern
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--Time Warner Cable 1Q gains on broadband, business services
--CEO Glenn Britt says company ready to invest, reward shareholders
--Video subscriber losses higher than some analysts expected
(Adds details on 1Q earnings throughout.)
By William Launder
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Time Warner Cable Inc.'s (>> Time Warner Cable Inc) first-quarter profit rose a stronger-than-expected 18% as the cable operator's growing broadband business helped offset ongoing losses of video subscribers.
Like many of its peers, Time Warner Cable has struggled to stanch the flow of residential video customers, who are foregoing increasingly pricey cable packages or turning to Internet-based services to watch TV and movies. Although video subscriber defections have slowed over the past half year, Time Warner Cable is focusing more on its more profitable residential broadband service and fast-growing business services unit.
The country's second-largest cable operator by subscribers lost 94,000 residential video subscribers, higher than some analysts had expected. But it added 214,000 residential high-speed data subscriptions and 112,000 voice subscriptions, excluding acquired customers.
Overall, the company added a net 261,000 customers during the quarter and another 1.6 million through recent acquisitions, bringing its base--which counts a customer with two services as two subscribers--to 28.9 million.
Time Warner Cable has completed several acquisitions in recent years in order to gain scale and subscribers, including its $3 billion deal to acquire Insight Communications.
Chief Executive Glenn Britt further suggested that the company was prepared to invest more money in growing the business and returning cash to shareholders.
"Now that we have closed the Insight acquisition, our increased cash flow is available to fuel further investments in the business and capital returns to our shareholders," Britt said in a press release.
Time Warner Cable reported a profit of $382 million, or $1.20 a share, up from $325 million, or 93 cents a share, a year earlier. Excluding certain items, per-share earnings rose to $1.30 from $1.01 as revenue rose 6.4% to $5.13 billion.
Analysts polled by Thomson Reuters were looking for a profit of $1.21 a share on $5.12 billion of revenue.
Revenue from residential customers increased 4.1%, primarily because of higher prices, the increase in new data subscribers and moving more existing subscribers into higher-priced services.
Business services revenue jumped 38% million, led by sharp gains in revenue from voice services, wholesale data for wireless phone providers and high-speed data subscriptions. While growing rapidly, the business services unit only generates around 10% of the revenue earned by Time Warner Cable's residential business, which brought in $4.43 billion for the quarter.
Shares closed at $82.15 Wednesday and were inactive premarket. The stock has climbed 29% so far this year.
-By William Launder, Dow Jones Newswires; 212-416-3412; william.launder@dowjones.com
--Drew FitzGerald contributed to this report.
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