Time Warner Cable Reports Strong Q2


Time Warner Cable continued the trend of strong cable second quarter results shares, reporting better than expected growth and hunting that it is making moves to put even more cash in investors' pockets.
Time Warner Cable results follow Comcast, which reported last week, and while basic subscriber losses were up from last year (111,000 vs. 57,000 in Q209), advanced service growth continued at a healthy pace. Time Warner Cable added 96,000 high-speed Internet customers and 75,000 digital phone customers, in line with analysts' consensus estimates.
Revenue at the second largest cable operator rose 5.8% to $4.7 billion in the period and adjusted operating income before depreciation and amortization (a measure of cash flow) increased 6% to $1.8 billion. While free cash flow declined 14% in the period to $664 million, year to date it is up 18.6% to $1.2 billion. It was that continued growth in free cash flow - and a subsequent decline in debt - that had some investors guessing what the company would do with its cash and excess borrowing capacity. Time Warner Cable has set a target leverage ratio of 3.25 times cash flow. As of June 30, the company's leverage was at about 3 times.
Chief financial officer Rob Marcus attempted to address any potential speculation on a conference call with analysts, saying that the company is currently in discussions concerning additional ways it can return capital to shareholders. Time Warner Cable will provide further detail on its third quarter conference call, Marcus added.