Time Warner Earnings Go SPLAT!

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

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Time Warner Inc. Earnings Cheat Sheet

Results: Net income for Time Warner Inc. fell to $430 million (44 cents per share) vs. $638 million (59 cents per share) a year earlier. This is a decline of 32.6% from the year-earlier quarter.

Revenue: Fell 4.1% to $6.74 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Time Warner Inc. reported adjusted net income of 59 cents per share. By that measure, the company fell in line with the mean estimate of 59 cents per share. Analysts were expecting revenue of $6.81 billion.

Quoting Management: Chairman and Chief Executive Officer Jeff Bewkes said: “Across Time Warner, we’re continuing to make progress on our long-term goals, and we remain on track to meet our financial objectives for the year. This quarter, our results highlight the strength and potential of our networks and television production businesses, which generate the bulk of our revenues and earnings. We saw terrific performance at most of the Turner networks. For instance, TNT was the #1 network on ad-supported cable, bolstered by another great NBA season and the introduction of original hits like Dallas. TBS was up 30% in primetime in its key demographic in the quarter, thanks in part to the success of The Big Bang Theory, which remains the #1 sitcom on ad-supported cable. HBO’s original series like True Blood and Game of Thrones are continuing to see strong viewership. At the same time, HBO’s programming is continuing to garner critical acclaim, including receiving 81 Primetime Emmy nominations, the most of any network for the twelfth year in a row.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 10.8%.

The company’s net income has fallen in each of the last two quarters. In the first quarter, net income fell 10.7% from the year-earlier quarter.

The company fell in line with estimates last quarter after beating expectations in the previous two quarters. In the first quarter, it topped the mark by 3 cents, and in the fourth quarter of the last fiscal year, it was ahead by 7 cents.

Margins rose in the first quarter after falling the quarter before. Gross margin grew 0.2 percentage point from the year-earlier quarter to 42.7%. In the fourth quarter of the last fiscal year, the figure rose 1.2 percentage points to 43% from the year earlier quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the third quarter has risen to 90 cents per share from 87 cents. The average estimate for the fiscal year is $3.20 per share, falling from $3.21 thirty days ago.

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

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