Time Warner Cable Q3 Earnings Miss On Video Losses

Time Warner Cable ( TWC ) reported Monday morning third-quarter profit and salesthat missed expectations as video subscriber losses swelled and broadband customer growth cooled. The cable operator said Q3 earnings rose 27% vs. a yearearlier to $1.41 a share, excluding items. Revenue rose 9.2% to $5.36 billion. Analysts had estimated EPS of $1.43 with revenue climbing 9.6% to $5.38 billion. Shares gapped down at the open, falling 6.3% as of 10:29 a.m. ET. Several other cable and satellite rivals also retreated. Time Warner cable said it lost140,000 video customers in the three months ended Sept. 30, more than the 128,000 it lost in the year-earlier period. Comcast ( CMCSA ), which reported Q3 earnings last week, had narrowed its video subscriber losses. Time Warner Cable said it added 85,000 customers for high-speed video services compared to 89,000 a year earlier. "Our third-quarter results were good, with most trendssimilar to the preceding quarter. Our operating results were driven by continued strong performance in residential high-speed data and business services, an acceleration in high-margin political advertising and the contributions from our Insight systems," said CEO Glenn Britt in a statement."During the quarter, we remained focused on investing in growing our business, while at the same time ramping capital returns to our shareholders." Bryan Kraft, analyst at Evercore Partners said in an analyst note, "Overall, the quarter was a slight miss relative to our expectations, with video revenue and broadband net adds comingin light, but partially offset by lower operating expensesand a smaller residential video subscriber decline. Kraft added, "Revenue was slightly lower than we forecasted at $5.36B vs. our$5.39B estimate, driven by lower video ARPU. The softness in video ARPU was due to both lower VOD and subscription ARPU. Business services revenue was slightlyhigher than we estimated." Capital spending came in$100 million higher than expected, said ISI Group analyst Vijay Jayant. The company had rescheduled earnings from Oct. 31 after hurricane Sandy hit the East coast. Analysts had lowered EPS estimates from $1.49 to $1.43a week ago