Time Warner Cable to buy back more stock, shares up

Stock Market Predictions

(Global Markets) - Time Warner Cable Inc (TWC.N) raised its quarterly dividend and surprised Wall Street by announcing plans to buy back $4 billion of its stock, sending shares up more than 8 percent on Thursday.

The No. 2 U.S. cable provider also posted a higher quarterly profit as it added more customers than expected for its broadband services and stemmed the decline in its video business.

The company raised its quarterly dividend by 17 percent to 56 cents a share, which means its shares now carry a 3.2 percent dividend yield based on Wednesday's closing price.

While Collins Stewart analyst Thomas Eagan said he was expecting a dividend increase, he was surprised the company increased its share buyback so soon. He said he did not expect such a move until the third quarter of 2012 and that it signals a strong outlook for future cash generation.

"It is notable and speaks to their confidence to their cash flow growth," he said.

The high end of the company's forecast range for 2012 earnings per share was slightly above Wall Street estimates. It now expects earnings per share in the range of $5.25 to $5.50, compared with the average estimate of $5.48, according to Thomson Global Markets I/B/E/S.

Time Warner Cable, which competes with Comcast Corp (CMCSA.O) and Cablevision Systems Corp (CVC.N), said fourth-quarter profit rose to $564 million, or $1.75 a share, from $392 million or $1.09 a share a year earlier.

Its revenue rose 4 percent to $5 billion, topping analysts' average estimate of $4.97 billion, according to Thomson Global Markets I/B/E/S.

It added 117,000 broadband Internet residential customers, beating analysts' estimates for 87,000.

The company lost 129,000 video residential subscribers, compared with analysts' expectations for a loss of 130,000, according to StreetAccount data. Bernstein Research analyst Craig Moffett wrote in a research note that "video subscribers continue to trend better."

Time Warner Cable and its peers have been losing video customers to phone and satellite providers and Internet companies such as Netflix Inc (NFLX.O) and Hulu. On Wednesday, Netflix surprised Wall Street by adding 610,000 net new subscribers in the United States in the latest quarter.

AT&T Inc (T.N), which has a TV service called U-Verse, said in its quarterly earnings report on Thursday that it added 208,000 TV subscribers in its fourth quarter.

Time Warner Cable shares were up 7.8 percent at $74.50 at midmorning on the New York Stock Exchange, off an earlier high at $74.88.

(Reporting by Liana B. Baker in New York; Additional reporting by Saqib Iqbal Ahmed in Bangalore; editing by John Wallace and Matthew Lewis)