Charter Communications Earnings: Margins Suffer as Costs Rise

Charter Communications Inc. (NASDAQ:CHTR) reported its results for the first quarter. Charter Communications offers residential and commercial customers traditional cable video programming (basic and digital video), high-speed Internet services, and telephone services, as well as advanced broadband services.

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Charter Communications Earnings Cheat Sheet for the First Quarter

Results: Loss narrowed to $94 million (loss of 95 cents per diluted share) from $110 million (loss of 97 cents per share) in the same quarter a year earlier.

Revenue: Rose 3.2% to $1.83 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Charter Communications Inc. fell short of the mean analyst estimate of a loss of 47 cents per share. Analysts were expecting revenue of $1.84 billion.

Quoting Management: “Charter reported solid first quarter performance driven by continued improvements in customer trends as we build on the momentum gained in 2011,” said Tom Rutledge, President and Chief Executive Officer. “We are effectively executing on our strategic priorities of delivering a great customer experience, capitalizing on our market-leading Internet product, improving our video and voice products, and growing our commercial business. We are accelerating certain initiatives, including driving digital penetration through additional HD channel launches, a more simplified packaging and pricing structure, and an enhanced product offering, all of which provide more value to our customers. We will move quickly to capitalize on these opportunities and leverage our powerful network to grow our business.”

Key Stats:

The company has missed analyst estiamtes for four quarters in a row. It fell short by 22 cents in the fourth quarter of the last fiscal year, by 77 cents in the third quarter of the last fiscal year, and by 90 cents in the second quarter of the last fiscal year.

Gross margin shrank 1.2 percentage points to 55.4%. The contraction appeared to be driven by increased costs, which rose 6% from the year earlier quarter while revenue rose 3.2%.

Revenue has increased for four quarters in a row. Revenue increased 2.8% to $1.83 billion in the fourth quarter of the last fiscal year. The figure rose 2.3% in the third quarter of the last fiscal year from the year earlier and climbed 1.1% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the second quarter has moved from a loss of 19 cents a share to a loss of 35 cents over the last ninety days. The average estimate for the fiscal year has reached a loss of $1.23 per share, down from a loss of 24 cents ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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