Discovery Communications Earnings: The Streak is Broken

S&P 500 (NYSE:SPY) component Discovery Communications Inc (NASDAQ:DISCA) reported its results for the first quarter. Discovery Communications is a global media and entertainment company that offers programming across multiple distribution platforms in more than 170 other countries.

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Discovery Communications Inc Earnings Cheat Sheet for the First Quarter

Results: Net income for the broadcast-radio/TV fell to $222 million (57 cents per share) vs. $305 million (74 cents per share) a year earlier. This is a decline of 27.2% from the year-earlier quarter.

Revenue: Rose 16% to $1.1 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Discovery Communications Inc fell short of the mean analyst estimate of 60 cents per share. It beat the average revenue estimate of $1.06 billion.

Quoting Management: David Zaslav, Discovery’s President and Chief Executive Officer said, “Discovery is off to a great start in 2012 with strong first quarter results that built upon the consistent financial and operating momentum we generated throughout 2011. Viewers around the world are spending more time with our networks than ever before, and we are leveraging the demand for our programming across a worldwide ad market that remains healthy. The universal appeal of our content is also providing us further opportunities to capitalize on developing distribution systems and an evolving global pay-tv landscape. Investing in our brands to maximize the potential of our unique distribution platform, as well as emerging opportunities, remains a priority, and we are focused on doing so while delivering sustained growth and returning capital to shareholders.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 75.9% from the year earlier, while the figure increased 27.4% in the third quarter of the last fiscal year, more than twofold in the second quarter of the last fiscal year and 80.5% in the first quarter of the last fiscal year.

Revenue has increased for four consecutive quarters. Revenue increased 10.5% to $1.12 billion in the fourth quarter of the last fiscal year. The figure rose 18.3% in the third quarter of the last fiscal year from the year earlier and climbed 10.8% in the second quarter of the last fiscal year from the year-ago quarter.

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the fourth quarter of the last fiscal year, it topped the mark by 2 cents, and in the third quarter of the last fiscal year, it was ahead by 4 cents.

Gross margins expanded last quarter, rising 0.5 percentage point to 71.8% from the year-earlier quarter. This ends a streak of two consecutive quarters of shrinking margins.

The company’s current liabilities rose to $5.37 billion from $746 million from the fourth quarter of the last fiscal year.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for second quarter has fallen from 74 cents per share to 73 cents. At $2.78 per share, the average estimate for the fiscal year has fallen from $2.81 ninety days ago.

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

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