Shaw Communications Inc. ( SJR - Analyst Report ) declared solid financial results for the fourth quarter of fiscal 2012. GAAP net income from continuing operations was $131.4 million, down 20.4% year over year. GAAP net earnings per share were 28 cents, down 24.3% year over year. However, the fourth-quarter net earnings per share of 28 cents beat the Zacks Consensus Estimate by a penny. Quarterly total revenue of approximately $1,196 million inched up 2.5% year over year, beating the Zacks Consensus Estimate of $1,170 million.

Quarterly operating income before amortization was around $495 million, up 4.2% year over year. Quarterly operating margin stood at 41.4% compared with 40.7% in the prior-year quarter. In the fourth quarter of fiscal 2012, Shaw Communications generated around $351 million of cash from operations, remaining same year over year. Free cash flow in the reported quarter was approximately $102 million compared with $48.4 million in the year-ago quarter.

At the end of fiscal 2012, Shaw Communications had cash & cash equivalents of $422 million compared with $443.7 million at the end of fiscal 2011. At the end of fiscal 2012, Shaw Communications had $5,201.4 million in outstanding debt compared with $5,265 million at the end of fiscal 2011. Debt-to-capitalization ratio at the end of fiscal 2012 was 0.54 compared with 0.57 at the end of fiscal 2011.

Subscribers Statistics

As on August 31, 2012, Basic Cable customer base was 2,219,072, reflecting a net reduction of 16,474 customers in the previous quarter. Digital TV customer base was 1,917,857, representing a net deletion of 7,907 customers. Digital TV penetration rate is now 86.4% of basic TV. Internet customer base stood at 1,912,230, reflecting quarterly net addition of 6,062 customers. Digital phone lines were 1,363,744, reflecting a year-over-year net addition of 24,185 lines. DTH customer base was 910,023, representing a quarterly net addition of 1,155 customers.

Cable Segment

Quarterly revenue was $793.6 million, up 2.4% year over year. Strong revenue growth was attributable to subscriber addition and rate increases. Quarterly operating income before amortization was $391.4 million, remaining same year over year.

Satellite Segment

Quarterly total revenue of $210.5 million was up 2.9% year over year. Within this segment, DTH revenue was $190.7 million, up 3.2% year over year and Satellite Services revenue was $19.8 million, remaining flat year over year. The segment’s quarterly operating income before amortization was $76.1 million, up 5.5% over the year-ago quarter.

Media Segment

Quarterly total revenue was $214.5 million, up 3.3% year over year. Operating income before amortization was $27.7 million, up a whopping 133.3% year over year.

Our Recommendation

Currently, Shaw Communicationshas a Zacks #3 Rank, implying a short-term Hold rating on the stock. Moreover, considering the fundamentals, we retain a long-term Outperform recommendation. This was primarily based on the company’s improving EBITDA margin and free cash flow due to the discontinuation of promotional activities. Moreover, Shaw Communications launched “Shaw Go”, - an innovative TV Everywhere service, which will be available on Apple Inc. ( AAPL - Analyst Report ) developed iPad 2 and iPhone 5.