Time Warner’s Earnings Boosted by Buybacks

Source: Wikimedia Commons
Time Warner Inc. (NYSE: TWX) reported third-quarter 2012 earnings this morning. The New York City cable provider posted adjusted diluted earnings per share (EPS) of $0.86 on revenues of $6.8 billion. In the same period a year ago, the company reported EPS of $0.79 on revenues of $7.07 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.82 and $6.9 billion in revenues.

Time Warner attributes the rise in earnings to its repurchase of $869 million in stock in the first 10 months of 2012: “The increase in Adjusted EPS reflects fewer shares outstanding.”

The company’s CEO said:

With one quarter left to go in 2012, we’re on track for another very strong year. The highlight this quarter was the strength of our Networks businesses, which delivered double digit Adjusted Operating Income growth. This performance illustrates that our investments in content and technology are continuing to pay off. … Overall, I’m very confident about how we’re positioned heading into next year and beyond.

The company made no comment on its outlook, but the consensus estimates call for fourth-quarter EPS of $1.13 on revenues of $8.36 billion. For the full year, the EPS estimate is $3.20 on revenue of $29.05 billion.

Time Warner’s year-over-year revenue decline was attributed to drops in its film and TV entertainment group and its publishing segment. Revenues were down 3% and operating income was down 1% for the company. There’s really not much to cheer about in this report. Without the stock buybacks, investors would likely be quite unhappy today.

The company’s shares are inactive in premarket trading this morning, having closed at $43.11 last night in a 52-week range of $32.09 to $46.59. The consensus target price for the shares was around $49.50 before today’s report.

Paul Ausick

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