Time Warner Cable Inc. (TWC) reported dismal financial numbers in the fourth quarter of 2014, with both the top and the bottom line missing the respective Zacks Consensus Estimate.
Quarterly adjusted (excluding special items) earnings per share of $2.03 fell short of the Zacks Consensus Estimate of $2.09. However, adjusted earnings increased 11.5% year over year. Quarterly GAAP net income came in at $554 million or $1.95 per share compared with $540 million or $1.89 in the prior-year quarter. At $5,790 million, the quarter’s total revenue missed the Zacks Consensus Estimate of $5,805 million, but increased 3.8% year over year.
Quarterly adjusted operating income before depreciation and amortization (OIBDA) grew 5.6% year over year to $2,140 million. Operating income improved 4.5% year over year to $1,226 million.
In the reported quarter, Time Warner Cable generated $1,810 million of cash from operations compared with $1,599 million in fourth-quarter 2013. Free cash flow in the fourth quarter was $891 million as against $773 million in the year-ago quarter.
At the end of the final quarter of 2014, Time Warner Cable had $707 million in cash and marketable securities compared with $525 million at the end of 2013. Outstanding debt stood at $22,701 million as against $23,285 million at end-2013. At the end of the quarter under review, the debt-to-capitalization ratio stood at 0.74 against 0.77 at the end of fiscal 2013.
Residential Services Segment
Quarterly total revenue was $4,601 million, up 0.5% year over year. Within the segment, video revenues were $2,464 million, down 2.8% from the prior-year quarter. High-speed data revenues were $1,644 million, up 7.4% year over year. Voice revenues came in at $470 million, down 4.7% year over year. Other revenues were $23 million, up 15% from the year-ago quarter.
Subscriber Statistics: In fourth-quarter 2014, video subscriber count declined by 38,000 to 10.789 million. High-speed data subscribers rose by 168,000 to 11.675 million. Voice subscribers grew by 295,000 to 5.284 million. Single-play subscribers declined 44,000 to 5.630 million while double-play subscribers dropped 175,000 to 4.525 million. The triple-play customer base added 273,000, reaching the total count to 4.356 million.
Business Services Segment
Quarterly total revenue stood at $755 million, up 22.6% year over year. Within the segment, video revenues were $93 million, up 4.5% year over year. High-speed data revenues were $361 million, up 23.2% year over year. Voice revenues totaled $138 million, up 22.1% from the fourth quarter of 2013. Wholesale transport revenues were $112 million, up a substantial 60% year over year. Other revenues came in at $51 million, flat year over year.
Subscriber Statistics: In fourth-quarter 2014, video subscribers were 203,000, flat year over year. High-speed data subscribers rose 12,000 to 578,000. Voice subscribers improved by 10,000 to 323,000. Single-play count increased by 5,000 users to 346,000. Double-play subscribers registered growth of 7,000 to 265,000. Triple-play subscribers increased by1,000 to 76,000.
Other Operational Segment
Quarterly total revenue was $498 million, up 16.1% year over year. Within the segment, advertising revenues grossed $332 million, up 19.4% from the final quarter of 2013. Other revenues reached $166 million, up 9.9% year over year.
Strategic Move
In Feb 2014, Comcast Corp. (CMCSA) reached an agreement with Time Warner Cable to acquire the latter in an all-stock deal valued at around $45.2 billion. Liberty Media Corp. (LMCA), which controls a 27.3% stake in Charter Communications Inc. (CHTR), was also aggressively pursuing the idea of Charter Communications taking over Time Warner Cable. However, Charter Communications lost to Comcast in the bid.
At present, the proposed merger between Comcast and Time Warner Cable is under strict regulatory scrutiny. A decision is expected in the first quarter of 2015.
Time Warner Cable currently carries a Zacks Rank #3 (Hold).
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