October 27, 2011
Time Warner Cable Inc., the second- largest U.S. cable-television operator, reported third-quarter profit that missed analyst's estimates after losing video subscribers.
Earnings per share increased to $1.08, the New York-based company said in a statement today. Analysts projected $1.14, the average of estimates compiled by Bloomberg. Time Warner Cable lost 126,000 video subscribers as customers defected to Verizon Communications Inc.'s FiOS, AT&T Inc.'s U-verse and DirecTV, according to Vijay Jayant, an analyst at ISI Group in New York. Analysts estimated a loss of 113,000, according to data compiled by Bloomberg. Overall customers - video, phone and broadband for corporations and households - fell by 16,000 in the quarter. "The aggregate customer number is one investors watch, and a negative number may cause the stock to be weak again," said Laura Martin, an analyst with Needham & Co. in Pasadena, California. Time Warner Cable fell 6.9 percent to $65.75 at 9:39 a.m. in New York. It has gained 7 percent this year.
DirecTV's "Sunday Ticket" promotion, which gave new customers a free subscription to access all Sunday National Football League games during the year, likely accelerated Time Warner Cable's video decline, Jayant said. DirecTV will release its quarterly results Nov. 3.
Time Warner Cable’s revenue rose 3.7 percent to $4.9 billion, compared with analysts' average estimate of $4.94 billion. The company continued share buybacks, repurchasing 8 million shares for $573 million in the quarter. Net income fell to $356 million from $360 million, or $1 a share, a year earlier. The company gained 89,000 residential high-speed data clients and 16,000 business customers. Residential broadband revenue grew 7.8 percent while video sales fell 0.5 percent.
Chief Executive Officer Glenn Britt is positioning Time Warner Cable to be an Internet provider first and a video operator second, according to Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. "Broadband is Britt's anchor product now," Moffett said. "The cable operators are running away from AT&T and Verizon in the broadband business, which has become the engine that's carrying Time Warner Cable."
Fourth-quarter video and broadband net additions are trending similar to a year ago, Time Warner Cable Chief Financial Officer Irene Esteves said on a conference call. Voice-line additions are trending lower, she said. To fuel demand for its video product, the company introduced an application this year that lets people watch live programming on Apple Inc.'s iPad tablet computer. Time Warner Cable plans to make the app available on other devices, Britt said on today's call. Bloomberg
House Speaker Sam Smith, testifying in the political corruption case known as Computergate, today said he was unaware that taxpayer funds were used to illegally finance a computer database until sometime after the Attorney General launched its probe into legislative wrongdoing in the Capitol.
Smith, a Republican from Jefferson County who has not been charged, said repeatedly that he relied on the House GOP legal team to vet all contracts before he signed them. "The legal department reviewed all contracts," said Smith, during nearly one hour on the witness stand in Dauphin County Court. "All of this was reviewed by lawyers, it's legal, it's been checked out," said Smith, who is not a lawyer.
When asked by reporters afterward whether, as House Majority leader at the time, he should have known what was going on, Smith said: "I do not feel I was negligent and I certainly don't believe I was complicit." Ten Republicans, among them former Speaker John Perzel of Philadelphia, were charged with using more than $10 million in public funds to create a sophisticated computer database for constituents that was then used to help GOP candidates win elections.
Perzel and six others have pleaded guilty to various corruption charges and one defendant, Perzel aide John Zimmerman, will be tried separately later this year, leaving two defendants to stand trial: former House Appropriations Committee Chairman Brett Feece of Lycoming County and his former aide, Jill Seaman. Smith, who appeared confident and composed on the stand, said as House Majority leader in 2004-2005 he signed off on contracts with a New Orleans-based company called GCR & Associates. During the time the GOP caucus was using GCR’s services, he said, he was led to believe the data would be used to improve interaction between members and constituents. "It was strictly legislative," said Smith.
Under questioning by Seaman's attorney Bill Fetteroff, Smith said in 2004 he expressed concern about the nature of the GCR contract and asked Perzel's chief of staff Brian Preski - who also made a plea deal in the case - to explain the purpose of the contract.Smith said that he only found out the data had been used for campaigning after then-Attorney General Tom Corbett launched his legislative corruption probe in 2007.
Smith appeared to contradict testimony from Perzel who on the stand last week said "everyone knew" that the computer data was being used for campaign purposes. Records show GCR was paid a total of $9 million by House Republicans between 2003 and 2008. When chief prosecutor Frank Fina asked Smith whether Feece ever told him who was paying for the contracts, he said he did not until "sometime post-investigation." It was only as the state investigation was unfolding, Smith said, that "he told me [the House Republican Campaign Committee] was not paying." philly.com; more in Harrisburg Patriot-News
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