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The Zacks Analyst Blog Highlights: Google, Time Warner Cable, Comcast Corporation, Verizon Communications and AT&T

TWC CMCSA VZ T

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For Immediate Release

Chicago, IL – October 19, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Google , Time Warner Cable (TWC - Analyst Report), Comcast Corporation (CMCSA - Analyst Report), Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report).

 

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Here are highlights from Thursday’s Analyst Blog:

Google Earnings Released Early

 

Google had its 3Q12 earnings inadvertently released by printing company RR Donnelly. The results included Motorola's operations and thus caused some mild confusion.

Revenue was $14.10 billion, well ahead of most estimates as few modeled in the $2.58 billion that came from Motorola. Of the Moto revenue, there was $1.78 billion from mobile and $797 million from the home segment.

Paid clicks increased 33% from the year ago period and were up 6% on a sequential basis. We have seen in the past when the number of clicks increases like that, the cost per click will tend to come down. Costs per click decreased 15% on an annual basis and fell 3% sequentially.

With Moto in the results we saw significantly higher cost of revenues. That line item increased to 27% of revenues from 12% of revenues in the year ago period.

Amortization Expenses jumped significantly as did Stock Based Compensation. Operating expenses were flat with year ago levels.

The bottom line came in well below estimates with EPS of $7.35 being $1.53 below the Zacks Consensus Estimate of $8.88. That works out to be a 17% negative earnings surprise.

 

 

Time Warner Launching SaaS Services

 

Time Warner Cable Business Class, a division of Time Warner Cable (TWC - Analyst Report), is all set to launch cloud based Software as a Service (SaaS), which will provide secure and cost effective software and communication solutions to small and medium business enterprises (SMBs). We believe this latest offering from Time Warner Cable is targeting the online software service business of the lucrative SMB market. 

This cloud based solution will offer SMBs with a software infrastructure capable of supporting large enterprises and will help eliminate the cost and complexities of owning and managing their own equipment and employees.

Some of the notable benefits of this service are that it provides access to e-mail, contact lists and important documents on multiple devices including PC, smartphones and tablets in addition to providing round the clock customer services. Large size of IT infrastructure is an added advantage as it allows flexibility to businesses to adapt to changing needs. 

Cloud based services business has been on the growth path for quite some time as it significantly reduces the operational cost of enterprises by providing secure and affordable data management solutions, thereby enhancing business productivity. To tap this market, Time Warner has acquired cloud services provider Navisite for $230 million in February 2011.  

The Business Segment has become a major growth driver for Time Warner Cable. In the second quarter 2012, Business Service Segment generated revenue of $464 million, up 28.5% year over year. Arch rival Comcast Corporation’s (CMCSA - Analyst Report) business service revenue in the second quarter of 2012 has shown a growth of 34.2%.  

We believe Time Warner is betting on SMBs to tap this latest service as it will reduce their IT spending, which in turn will further pump up the cable operator’s business service revenue. Furthermore, it will allow Time Warner to compensate its market share loss from telecom carriers like Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report) in the cable and broadband segment.     

We maintain our long-term Neutral recommendation on Time Warner Cable. The company also retains a Zacks #3 Rank, implying a short-term Hold rating.

 

 

 

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