Why Charter Communications' Shares Popped
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 Charter Communications gained more than 10% today, after reporting earnings, despite the fact that they weren't particularly good earnings.
So what: Charter's fourth quarter revenue of $1.91 billion was a 4% increase year over year, and right in line with Wall Street's consensus. Its bottom-line result, a loss of $0.41 per share, was significantly worse than the $0.18 loss per share that analysts had modeled. Higher revenue from TV service sales -- which came in at $92 million -- were apparently a bright spot in this otherwise weak report. Analysts were expecting $894 million in revenue for the segment. A higher-than-expected rate of customer upgrades, and narrower customer losses than seen in 2011, also offered reasons for optimism.
Now what: Charter agreed to purchase Cablevision's Optimum West unit just this past month, which should help it grow at a faster rate. The $0.41 loss per share is a relatively narrow $40 million net loss, and is an improvement over last year's $0.63 loss per share in the fourth quarter. However, with no profitability on the horizon, and a larger debt load than its total market cap, it's worth pondering whether this stock is still worth holding onto.
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