Shares of Time Warner Cable Inc., the second-largest U.S. cable-television operator, dropped the most in more than a year Monday after the loss of video customers dragged down third-quarter earnings.
Time Warner Cable fell 6.4 percent to $91.93 at the close in New York, the biggest one-day drop since October 2011. The shares, which have gained 45 percent this year, were the biggest decliner in the Standard & Poor’s 500 Index Monday.
Time Warner Cable lost 140,000 residential video subscribers, more than the 128,000 that analysts had estimated. The cable provider also added fewer Internet and voice customers than analysts projected, a sign Time Warner Cable is struggling to market the correct bundles of services to its customers, said Paul Sweeney, an analyst at Bloomberg Industries.
“It’s a sloppy quarter across the board operationally,” Sweeney said. “Time Warner Cable has long promoted its ability to segment its subscribers. The results this quarter call into question that marketing strategy.”
Net income rose to $808 million, or $2.60 a share, from $356 million, or $1.08 a share, a year earlier, the New York-based company said Monday in a statement. Excluding one-time items, earnings per share were $1.41, missing the $1.43 average analyst estimate compiled by Bloomberg.
Damage from Hurricane Sandy, which struck the East Coast last week, isn’t expected to be significant to the company’s fourth-quarter results, the company said in a filing. Time Warner Cable will credit customers for the time they lost service because of the storm, the company said Nov 2.
Sales rose 9.2 percent to $5.36 billion, missing the average estimate of $5.39 billion. Average revenue per user among TV customers was $74.32, hurt by a decline in video-on- demand orders. That missed the $76.49 estimate of James Ratcliffe, an analyst at Barclays Plc.
Time Warner Cable repurchased $500 million worth of shares in the period, falling short of the $850 million estimated by Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. The light repurchases were disappointing to investors who anticipated more after Time Warner Cable received $1.1 billion from Verizon Wireless for its wireless spectrum, a deal approved by regulators in August, Moffett said.
The selloff dragged down other cable stocks as well. Charter Communications Inc., the fourth-largest cable operator, fell 2.9 percent to $72.94. Cablevision Systems Corp., the fifth-largest U.S. cable provider, fell 1.6 percent to $16.53. Both companies will report their own results Tuesday morning.
© Copyright 2014 Bloomberg News. All rights reserved.