Charter (CHTR) Can’t Beat The Devil

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Charter (CHTR) just kept going up and up. At one point in July it was up over 275% from where it had traded a year earlier.

The premise was simple. The company’s $19 billion in debt had been refinanced on more favorable terms. It was still too much, but with VoIP, broadband, and digital TV customers streaming through the door, cash flow could keep ahead of the debt load.

Revenue for the quarter grew a ho hum 8.5% to just under $1.5 billion. The company did add VoIP customers at a good clip. Telephone customers increased by approximately 127,700 in the second quarter of 2007, nearly double the 66,500 net additions in the year-ago quarter.

High speed internet customers grew at a rate slightly better than last year, but digital video customers increased by approximately 7,600, compared to 23,800 net additions in the year-ago quarter.

But the company did not make a lot of financial progress and its shareholders payed the price. operating income was $200 million compared to $146 million the year before, but interest expense was essentially flat at $471 million.

So, Charter lost money. Too much for Wall St.

The stock fell 5% to $3.37. And, it has dropped from $4.93 on July 19.

Douglas A. McIntyre