TWC Takes A Beating After 'Sell’


Time Warner Cable stock was beaten up last Monday, losing more than 5% of its value after Pali Research media analyst Richard Greenfield slapped a “sell” rating on the shares.

TWC dipped as low as $26.48 each (down $1.43 per share or 5.1%) on Monday — their lowest point in six months — before closing at $26.77 each (down $1.14 per share or 4.1%).

In his research report last Monday, Greenfield adding that increased competition from Verizon’s FiOS service in the New York City area was the main reason for the downgrade.

Greenfield, citing discussions with FiOS customer-service reps, wrote that he believes the telco is already taking orders and could begin installing service as soon as Aug. 1.

What hurt TWC stock was the analyst’s claim that TWC is unprepared for FiOS.

As Greenfield was sounding the alarm on FiOS competition, another analyst tried to calm the growing storm.

Sanford Bernstein cable and satellite analyst Craig Moffett wrote last Monday that despite growing competitive fears, FiOS only touches about 10% of TWC’s total footprint, will pass only 30% of the city in its first year and won’t be completely built out until 2014.

Moffett also put the telco threat in perspective: Even with 20% of the market, the impact of FiOS on TWC’s revenue will be about 0.15%.

The jury is still out on which pundit investors believe. Shares in Time Warner Cable fell again to $26.52 on July 22, but rebounded to $27.36 on July 23 — still below their July 18 close of $27.91 per share.