Leading U.S cable TV operator, Charter Communications Inc. (CHTR), primarily offers three services – video, high-speed data and voice over its broadband cable systems to both residential and business customers.
Recently, Comcast Corp. abandoned its 14-month old plans for the $45.2 billion mega takeover of Time Warner Cable owing to strong reservations expressed by the Federal Communications Commission. However, once this news surfaced, Charter Communications Inc. took up the opportunity and started exploring options to bid for Time Warner Cable.
Notably, late last year, Charter Communications completed the deployment of digital network across its entire footprint. The digital migration project has already resulted in higher revenues and lower customer churn for the company and should drive the company’s top line further going forward.
However, the multi-channel video market in the U.S. is almost saturated. Online video streaming service providers such as Netflix Inc., Hulu.com, YouTube etc., have become a severe threat to cable TV operators as they provide an extremely cheap source of TV viewing. These trends are likely to persist in the first quarter of 2015 as well, tending to weigh on the company’s profitability in the said quarter.
Charter Communications currently carries a Zacks Rank #3 (Hold). The company has generated a massive negative average earnings surprise of 482.41% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: Charter Communications suffers losses in the first quarter of 2015. Quarterly, loss per share of 73 cents was in contrast to the Zacks Consensus Estimate of an income of 7 cents per share.
Revenue: Charter Communications generated total revenue of $2,362 million, below the Zacks Consensus Estimate of $2,375 million.
Key Stats to Note: During the first quarter of 2015, residential high-speed Internet subscribers rose by 125,000 to 4.891 million. Voice subscribers grew 42,000 to 2.481 million. However, video subscribers decreased by 7,000 to 4.153 million.
Stock Price: At the time of writing, the stock price of Charter Communications was down nearly 1.1% ($2.06) in the per-market trade on Nasdaq. Clearly the initial reaction to the release is negative. We believe loss of video subscribers and declines in voice and advertising businesses are near-term concerns for the investors.
Check back later for our full write up on this Charter Communications earnings report later!
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