Why Time Warner Cable's Shares Plunged


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Time Warner Cable fell 12% today after the company issued weak earnings guidance.

So what: Fourth-quarter revenue rose 9.9% to $5.5 billion and earnings per share of $1.57 beat estimates by $0.02. But investors are more concerned about the 2013 earnings forecast of $6.33 to $6.61, which fell well below the $6.91 bar set by Wall Street.

Now what: Time Warner's costs are rising because of huge sports deals, and investors already have the decline of cable in the back of their minds, so disappointing guidance isn't good. I'm staying away from this stock because I just don't see the long-term value in cable networks that may be replaced by on-demand sources. Time Warner still offers some valuable services to consumer,s but the long-term trends aren't in its favor right now.

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The article Why Time Warner Cable's Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published