Time Warner Inc. Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Time Warner Inc. (NYSE:TWX) reported its results for the first quarter. Time Warner is a media and entertainment company.

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Time Warner Earnings Cheat Sheet for the First Quarter

Results: Net income for the media conglomerate fell to $583 million (59 cents per share) vs. $653 million (59 cents per share) a year earlier. This is a decline of 10.7% from the year-earlier quarter.

Revenue: Rose 4.4% to $6.98 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Time Warner Inc. reported adjusted net income of 67 cents per share. By that measure, the company beat the mean estimate of 64 cents per share. It beat the average revenue estimate of $6.81 billion.

Quoting Management: Chairman and Chief Executive Officer Jeff Bewkes said: “We’re off to a great start to the year, and we’re benefiting from strong momentum for our content across our businesses.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 7 cents in the fourth quarter of the last fiscal year, by 4 cents in the third quarter of the last fiscal year, and by 4 cents in the second quarter of the last fiscal year.

Gross margin shrank 1.2 percentage points to 43%. The contraction appeared to be driven by increased costs, which rose 6.7% from the year earlier quarter while revenue rose 4.4%.

Revenue has risen the past four quarters. Revenue increased 4.9% to $8.19 billion in the fourth quarter of the last fiscal year. The figure rose 10.8% in the third quarter of the last fiscal year from the year earlier and climbed 10.2% in the second quarter of the last fiscal year from the year-ago quarter.

After three quarters of profit increases, the company reported a profit increase last quarter. Net income rose 0.5% in the fourth quarter of the last fiscal year from the year earlier, while the figure rose 57.5% in the third quarter of the last fiscal year and 13.5% in the second quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 70 cents a share to 67 cents over the last ninety days. Over the past three months, the average estimate for the fiscal year has climbed from $3.15 per to share to $3.20.

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

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