Time Warner beats estimates as cable sales grow
Net profit at Time Warner, the world's largest media company, was pulled down by weakness at its film division, but surging cable television earnings meant the figure was higher than analysts had estimated.
Net income declined 18 percent to $1.2 billion, or 31 cents a share, from $1.46 billion, or 32 cents, a year earlier, Time Warner said. Sales rose 9.2 percent to $11.2 billion.
Profit was dragged down by a 27 percent profit decline at the film division, which failed to produce a hit to beat the DVD release last year of "Harry Potter." Profit from cable rose 54 percent after the purchase of Adelphia Communications. The AOL unit gained 27 percent as advertising revenue increased, a sign that the chief executive, Richard Parsons, may be succeeding in his effort to revive the Internet unit.
"The company seems to be on the right track," said Tuna Amobi, an equity analyst at Standard & Poor's. "The highlights of the quarter were the cable unit and AOL."
Excluding one-time items, profit of 22 cents beat the 21-cent average of 17 analyst estimates from a survey.
Time Warner raised its 2007 forecast for earnings before one-time items to $1.05 a share, from $1 on Jan. 31.
Shares of Time Warner rose 69 cents, or 3.35 percent, to $21.29 in afternoon trading in New York. Shares in Time Warner Cable rose 56 cents, or 1.5 percent, to $36.78.
Earnings were buoyed by a $670 million gain on the sale of AOL's Web access division in Germany and $146 million from investments related to cable assets in Kansas City, Missouri. Excluding one-time items, profit a year ago was 26 cents a share.
Time Warner Cable, one of the largest U.S. cable companies, began trading publicly in January, as part of the parent company's purchase of cable franchises from Adelphia.
The cable division, 84 percent owned by Time Warner, benefited from demand for packages of phone, digital cable and Internet services. The unit reiterated Wednesday that sales and earnings would rise more than 30 percent in 2007. Revenue rose 61 percent to $3.85 billion, making it the fastest-growing Time Warner division for the fourteenth straight quarter.
Comcast, the industry leader, said Tuesday that its cable revenue would increase 12 percent a year through 2009. The company last week posted an 80 percent jump in first-quarter net income, as revenue rose 32 percent.
Profit at AOL rose to $542 million as ad revenue rose 40 percent. The growth in ad sales beat the 28 percent estimate by Bear Stearns.
Sales dropped 25 percent after AOL started offering its e-mail and software for free to broadband users last year to attract Web surfers and advertisers. Its Web access division lost 1.2 million subscribers in the quarter.
Parsons, the chief executive, hired the TV veteran Randy Falco in November to run AOL and implement the new strategy.
Profit at the film division fell 27 percent to $332 million. Revenue declined 1.3 percent to $2.7 billion.
DVD sales of "The Departed" and "Happy Feet" failed to match the figures turned in last year by the "Wedding Crashers" and "Harry Potter," according to the Goldman Sachs analyst Anthony Noto. Warner Bros. will release "Harry Potter and the Order of the Phoenix" in theaters in July.
Net income declined 18 percent to $1.2 billion, or 31 cents a share, from $1.46 billion, or 32 cents, a year earlier, Time Warner said. Sales rose 9.2 percent to $11.2 billion.
Profit was dragged down by a 27 percent profit decline at the film division, which failed to produce a hit to beat the DVD release last year of "Harry Potter." Profit from cable rose 54 percent after the purchase of Adelphia Communications. The AOL unit gained 27 percent as advertising revenue increased, a sign that the chief executive, Richard Parsons, may be succeeding in his effort to revive the Internet unit.
"The company seems to be on the right track," said Tuna Amobi, an equity analyst at Standard & Poor's. "The highlights of the quarter were the cable unit and AOL."
Excluding one-time items, profit of 22 cents beat the 21-cent average of 17 analyst estimates from a survey.
Time Warner raised its 2007 forecast for earnings before one-time items to $1.05 a share, from $1 on Jan. 31.
Shares of Time Warner rose 69 cents, or 3.35 percent, to $21.29 in afternoon trading in New York. Shares in Time Warner Cable rose 56 cents, or 1.5 percent, to $36.78.
Earnings were buoyed by a $670 million gain on the sale of AOL's Web access division in Germany and $146 million from investments related to cable assets in Kansas City, Missouri. Excluding one-time items, profit a year ago was 26 cents a share.
Time Warner Cable, one of the largest U.S. cable companies, began trading publicly in January, as part of the parent company's purchase of cable franchises from Adelphia.
The cable division, 84 percent owned by Time Warner, benefited from demand for packages of phone, digital cable and Internet services. The unit reiterated Wednesday that sales and earnings would rise more than 30 percent in 2007. Revenue rose 61 percent to $3.85 billion, making it the fastest-growing Time Warner division for the fourteenth straight quarter.
Comcast, the industry leader, said Tuesday that its cable revenue would increase 12 percent a year through 2009. The company last week posted an 80 percent jump in first-quarter net income, as revenue rose 32 percent.
Profit at AOL rose to $542 million as ad revenue rose 40 percent. The growth in ad sales beat the 28 percent estimate by Bear Stearns.
Sales dropped 25 percent after AOL started offering its e-mail and software for free to broadband users last year to attract Web surfers and advertisers. Its Web access division lost 1.2 million subscribers in the quarter.
Parsons, the chief executive, hired the TV veteran Randy Falco in November to run AOL and implement the new strategy.
Profit at the film division fell 27 percent to $332 million. Revenue declined 1.3 percent to $2.7 billion.
DVD sales of "The Departed" and "Happy Feet" failed to match the figures turned in last year by the "Wedding Crashers" and "Harry Potter," according to the Goldman Sachs analyst Anthony Noto. Warner Bros. will release "Harry Potter and the Order of the Phoenix" in theaters in July.
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