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Time Warner Cable Grows on Business Demand

By    |   Thursday, 08 March 2012 08:56 AM

Time Warner Cable (TWC) put up impressive growth numbers for 2011. The source of the growth was demand for the company's business services offerings, even while residential services results were flat. The strong results are expected to continue into 2012.

Time Warner Cable provides cable television, high-speed Internet and voice services to customers in 29 states. The company has approximately 14.5 million business and residential customers.

Of the total, about 8.5 million take two or more services from Time Warner. In 2011, residential services accounted for 87 percent of revenue, business services 7.5 percent and advertising brought in 4.5 percent.

For 2011, Time Warner Cable reported revenue of $19.67 billion, up 4.3 percent from $18.87 billion. Adjusted earnings for the year were $4.68 per share, up 26 percent from earnings of $3.72 in 2010.

The Wall Street consensus earnings estimate for 2012 is $5.43 per share, 16 percent above the 2011 results.

Growing business

In 2011, revenue from residential services increased by 2.6 percent on flat subscriber account growth. The number of video subscribers declined, which was offset by increased high-speed Internet subscriptions.

Business services revenue increased by 32.7 percent compared to 2010 results. Even though business services make up just 7.5 percent of total revenue, the revenue growth from businesses accounted for 45 percent of the total sales growth for the year.

Time Warner aggressively returned capital to shareholders in the form of share buybacks and dividends. The total number of shares outstanding was reduced by more than 10 percent during 2011.

For 2012, the dividend was increased to 56 cents quarterly, up 16 percent from the 48 cents per share paid in 2011. The stock currently yields about 3 percent.

Recently, the analysts at Stifel Nicolaus upgraded Time Warner Cable to a buy rating from their previous hold rating. Barclays Capital analysts reiterated their hold rating but increased their target price by $5 per share.

The company next reports on April 26.

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