Q4 In Line At Time Warner Cable

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Time Warner Cable kicked off the fourth-quarter cable reporting season Thursday morning with no big surprises, as revenue rose 5.9% to $4.8 billion and adjusted operating income before depreciation and amortization increased 1.6%, mostly in line with analyst estimates.
The strong results also spurred the nation's second-largest MSO to increase its quarterly dividend by 20% to 48 cents per share, or $1.92 per share annualized.
Strong growth on the high-speed data and phone fronts - especially in the commercial segment - helped drive the quarter. High-speed data subscriber increased by 94,000 in the period and digital phone customers rose by 72,000. The MSO lost 141,000 basic video customers in the period, greater than analyst consensus estimates of 122,000 basic subscriber losses for the period.
On a conference call with analysts, COO Rob Marcus said the effects of a sluggish housing market and a weak economy continue to pressure customer additions.
"We are seeing some modest improvement, but we continue to feel the effects of a weak housing market and high unemployment," Marcus said on the call. However, he pointed to growth in personal service units (a measure of customer relationships) for the quarter and for the year as a positive sign . TWC added 25,000 PSUs in the fourth quarter (compared to a loss of 17,000 in the third quarter)and for the full year added 344,000 PSUs.
On the commercial side, Time Warner Cable said revenue it an all-time high of $299 million in the quarter, up 23% from the previous year. In the full year, commercial revenue was up 21.2% to $1.1 billion.
On a conference call with analysts, Time Warner Cable chairman and CEO Glenn Britt said that the MSO's strong performance was a result of aggressively rolling out new products and enhancing existing offerings, like the system-wide launch of its Look Back service and a doubling of day-and-date titles on demand. In keeping with that stance, Britt said that TWC has begun a soft launch of a new smart home security product that will be offered across the footprint later this year.
Analysts for the most part were pleased with the results. In a research note Thursday, Sanford Bernstein cable and satellite analysts Craig Moffett called the results solid, although he joked the company's consistency is becoming a tad boring.
"Broadly speaking, they were better on revenues, lower on margins, and in-line on profitability," Moffett wrote. "Subscriber metrics were all broadly in line, and, perhaps most importantly, capital spending continues to plunge. In other words ... Yawn."
Investors, however, appeared excited by the results, driving Time Warner Cable shares up more than 3% ($2.27 per share) to $70.35 each in early trading Thursday.

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