Time Warner Earnings: Here’s Why Shares are Popping Now

Time Warner Inc. (NYSE:TWX) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 5%.

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Time Warner Inc. Earnings Cheat Sheet

Results: Net income increased 51.36% to $1.17 billion ($1.17 per diluted share) in the quarter versus a net gain of $773 million in the year-earlier quarter.

Revenue: Decreased 0.4% to $8.16 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Time Warner Inc. reported adjusted net income of $1.17 per share. By that measure, the company beat the mean analyst estimate of $1.1. It missed the average revenue estimate of $8.25 billion.

Quoting Management: Chairman and Chief Executive Officer Jeff Bewkes said: “In 2012, we had another strong year financially and operationally while we laid the foundation for continued growth. For the year, Adjusted Operating Income grew 4% to a record $6.1 billion, and Adjusted EPS rose 13% to $3.28. And, in the fourth quarter, both our Networks and our Film and TV Entertainment segments achieved record profits, with our overall Adjusted Operating Income up 16% and Adjusted EPS up 24%. Last year, we also continued to successfully execute against our key strategic priorities, which are to invest aggressively in our content, to lead the digital transition of our industries, to expand internationally and to exercise financial discipline in everything we do. That was evident as HBO won more Primetime Emmy and Golden Globe Awards than any other network; TBS was the number one ad-supported cable network in primetime among adults 18-34; TNT had 5 of the top 10 original programs on ad-supported cable; CNN won election night; Warner Bros. Television again produced more primetime hits than any other studio; Warner Bros. achieved global success and acclaim with films like The Dark Knight Rises, The Hobbit: An Unexpected Journey and Argo; and Time Inc. increased its market share in a difficult publishing environment.”

Key Stats (on next page)…

Revenue increased 19.26% from $6.84 billion in the previous quarter. Net income increased 39.62% from $838 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.81 to a profit $0.8. For the current year, the average estimate has moved up from a profit of $3.2 to a profit of $3.21 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)