Time Warner Earnings Improve, Revenues Falter, Investors Flee

Time Warner Inc. (NYSE: TWX) reported fourth-quarter and full-year 2015 results before markets opened Wednesday. The entertainment giant posted quarterly adjusted EPS of $1.06 and $7.08 billion in revenues. In the same period a year ago, the company reported EPS of $0.98 on revenues of $7.53 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.01 and $7.53 billion in revenues.

For the full year, Time Warner reported EPS of $4.75 and revenues of $28.12 billion, compared with 2014 EPS of $4.15 and revenues of $27.36 billion. Analysts were looking for EPS of $4.69 and revenues of $28.59 billion.

In a separate announcement, Time Warner provided full-year adjusted EPS guidance of $5.30 to $5.40, compared with the consensus estimate of $5.26. The company did not provide first-quarter guidance but analysts have estimated EPS of $1.30 and revenues of $7.44 billion.

Time Warner also raised its quarterly dividend by 15% from $0.35 to $0.4025, or from $1.40 to $1.61 annually. The company also said that its board has authorized a new $5 billion share buyback program.

In 2015 Time Warner repurchased 45 million shares for $3.6 billion.

The company’s CEO had this to say:

We had another very successful year in 2015, demonstrating once again Time Warner’s ability to deliver strong financial performance as well as creative and programming excellence. Revenues grew 3% and Adjusted Operating Income was up 19%. All three of our operating divisions increased revenue and profits while also investing to capitalize on the shift to on-demand viewing and growing worldwide demand for the very best video content.

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Investors remain skeptical, however, with shares opening the trading day down more than 6%. Overall operating profit was down for the quarter, but the company’s Turner division had fewer subscribers for both the year and the quarter even though higher subscription fees kept revenues higher. Fourth-quarter operating income in the HBO division was essentially flat year-over-year. The increase in fourth-quarter adjusted EPS was attributed to lower taxes and fewer shares outstanding.

Shares traded down about 7% in early action Wednesday morning, at $58.90, after posting a new 52-week low of $55.53. The 52-week high is $91.34. Thomson Reuters had a consensus analyst price target of $84.39 before these results were announced.