Charter Communications Tries Gas & Tax Rebate Gimmick Before Earnings (CHTR)

Charter Communications, Inc. (NASDAQ: CHTR) has announced a new gimmick tying the coming tax checks with the high gas prices.  The company said that new and current customers can stretch their tax rebates with Charter services, and by ordering online receive a $25, $50 or $100 gift card for gasoline.

Here is their comment on it from Barbara Hedges, Senior Vice President of Consumer Marketing for Charter:

• “This promotion is in addition to the everyday value the Charter Bundle™ already represents and is a great opportunity to stretch your rebate dollars even further.  Add Charter Digital Cable® and get access to On Demand and the stunning clarity of high definition, High-Speed Internet® for a fast and reliable Internet experience, or Charter Telephone® for savings of up to $150 per year versus the service provided by traditional phone companies. Order any of these services online and we will help you keep more of your tax rebate in your pocket – instead of your gas tank.”

So this shows that customers can order online one or all three of its services and receive a gift card for gasoline in the amount of $25 for ordering one service, $50 for ordering two services, and $100 for ordering all three of Charter’s services.

Frankly, there isn’t really anything wrong with Charter as an operating company.  The only thing wrong with Charter is its massive debt levels.  But that is like saying the only thing wrong with your new neighbor is that he put cars up on blocks in the front yard and that he overpaid for the house and isn’t making his payments.  The company as of December 31, 2007 carried $19.973 Billion in long-term debt alone, and total liabilities were listed as $22.553 Billion.  For comparing the size of this, its market cap is roughly $550 million and  it is expected to show roughly $6.5 Billion  in revenues for all of 2008. If Paul Allen was reading the Bible right after looking at his cable company’s financials, he might mistake a passage and read "Walking in the valley of the shadow of debt."

Charter has earnings scheduled for Monday, May 12, 2008.  This report may be one of the most important earnings reports in recent times as the economy weakens while it tries to keep growing revenues.  We’ll be previewing this one in our "10 Stocks Under $10" weekly newsletter this weekend.

Shareholders better hope that Charter got a great deal on their gas card partners in this bundling effort, or at least hope that there are some strict terms on offering these out.

Shares of Charter closed  up less than 1% at $1.41 today, and its 52-week trading range is $0.61 to $4.93.

Jon C. Ogg
May 8, 2008

Jon Ogg produces and edits the "10 Stocks Under $10" weekly newsletter for 247WallSt.com.