The U.S.' second largest cable operator racked up big gains in subscribers, but financial results fell shy of expectations. Fred Katayama reports.
A mixed picture at Time Warner Cable. The U.S.' second largest cable operator added a lot of subscribers in the latest quarter - far more than analysts expected for its home video, voice, and high speed Internet services. And it finally stemmed the bleeding of residential video customers after losing them for six years. But its financial results were weak. Profit fell as the company's expenses shot higher. It shelled out more on programming and customer care. Both profit and revenue fell short of Wall Street's targets. The results come just one week after Comcast dropped its $45 billion bid to buy it. Reuters has learned that Time Warner Cable is open to merger talks with its smaller rival, Charter Communications, whose earlier attempts to buy Time Warner Cable had failed. J.P. Morgan Securities analyst Philip Cusick said, "Time Warner Cable is investing aggressively in the business, and subscriber growth is responding, though at the cost of lower margins. If Charter is any example, then investors are likely to accept subscriber growth over margins, though we believe that a buyback and/or M&A will be needed to get the stock up substantially from here." Shares of Time Warner Cable have underperformed those of rivals Comcast and Charter over the past year.