January 28, 2010 / 12:46 PM / 10 years ago

UPDATE 2-Time Warner Cable posts profit, initiates dividend

 * Q4 EPS 91 cents vs Wall St estimate of 88 cents
 * Q4 rev rose 3 pct to $4.5 bln, in line with estimates
 * Initiates quarterly dividend of 40 cents
 * Sees tough conditions for residential growth in Q1
 * Shares rise as much as 6 pct  (Adds outlook, executive and analyst comments, share movement)
 By Yinka Adegoke
 NEW YORK, Jan 28 (Reuters) - Time Warner Cable Inc TWC.N posted a higher-than-expected quarterly profit on Thursday and initiated a regular dividend of 40 cents per share.
 The dividend payout, which had been expected for some time by investors, exceeded Wall Street expectations of around 31 cents and sent shares up as much as 6 percent in morning trading.
 Chief Executive Glenn Britt said on a conference call that the payout ratio of around 3.7 percent was higher than other cable rivals such as Comcast Corp (CMCSA.O) and Cablevision Systems Corp CVC.N and said there would be flexibility to raise the dividend in the future.
 “With a sizable dividend in place we believe it will attract investors from telco stocks as well,” said Collins Stewart analyst Thomas Eagan.
 Net income attributable to Time Warner Cable was $322 million, or 91 cents a share, beating analysts’ average forecast of 88 cents a share, according to Thomson Reuters I/B/E/S.
 Revenue rose 3 percent to $4.5 billion, in line with expectations.
 The second-largest U.S. cable TV operator said total video subscribers in the fourth quarter declined by 105,000 to end the year at 12.86 million. Miller Tabak analyst David Joyce had been expecting a loss of 30,000 subscribers.
 Time Warner Cable added 120,000 residential Internet subscribers and 75,000 residential phone subscribers. Joyce had forecast 100,000 new Internet subscribers and 120,000 phone subscribers.
 Company executives said that conditions for residential customers remained tough into the current quarter and the company is adding fewer customers than it did a year ago.
 Chief Operating Officer Landell Hobbs told investors the company is betting on a strong performance in commercial services which serve small- and medium-sized businesses. He forecast 2010 revenue growth of above 20 percent.
 Commercial services is still a small part of Time Warner Cable’s business but is growing fast.
 The company also expects to see a boost in operating profit from a return to growth in advertising sales.
 Time Warner Cable shares were up $1.68 or 3.9 percent at $45.30 on the New York Stock Exchange, off an earlier high at $46.24.  (Reporting by Yinka Adegoke; Editing by Derek Caney and Matthew Lewis)  (yinka.adegoke@thomsonreuters.com; + 1 646 223 6081; Reuters Messaging: Yinka.adegoke.reuters.com@reuters.net))   

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