Charter Can't Get No Respect
Cable Guy Alan Breznick, Cable/Video Practice Leader, Light Reading 11/1/2006
Take the company's third-quarter earnings report yesterday. Charter, the nation's fourth largest cable operator, posted strong year-over-year revenue and cashflow growth in the summer quarter. The MSO also reported very healthy growth in the number of new revenue generating units (RGUs) and bundled customers as it signed up 88,000 broadband, 82,000 VOIP, and 49,000 digital cable subscribers.
Yet, as usual, these genuinely positive developments on the operations side took a backseat to Charter's continuing financial woes. Despite its 10.9 percent increase in quarterly revenues to $1.39 billion on a pro forma basis, the company chalked up a net loss of $133 million because of higher debt and income tax payments, reversing a nominal $76 million gain in the year-ago period.
As a result, Charter's stock price, which had been slowly but steadily climbing over the last year from a low of 88 cents per share last fall to a high of $2.32 last week, fell back in early trading Tuesday. It didn't begin to recover and climb again until this morning, when Citigroup lifted its rating of the stock from Hold to Buy.
By raising its rating of the MSO's stock, Citigroup joins a very select group of Charter boosters on Wall Street. Up until now, only UBS Securities has had a Buy rating on the company's laggard stock.
In his latest research note on Paul Allen's cable giant, Aryeh Bourkoff, an analyst with UBS Securities, proclaimed that the MSO's revenue and cashflow growth are "a clear sign of recovery as the early stages of the VOIP rollout progress." He predicted that the company's stock could rise to as high as $10 a share if the company maintains its momentum.
So, at a time when the St. Louis Cardinals won their first World Series in 24 years, could things be finally looking up for the St. Louis-based Charter as well? Maybe so. But don't forget that this is Charter we're talking about. And, like Rodney, this company just can't get no respect.
— Alan Breznick, Site Editor, Cable Digital News