Charter's cash flow up 8.7% in third qtr.
Company to disclose bottom line results after auditor review
The company reported operating cash flow up 8.7% to $496.9 million for the quarter on sales of $1.18 billion, a 13% increase over the same period last year. Charter had previously hoped to improve cash flow growth to $13.7%.
To make matters worse, the company revealed it will have to hold off on disclosing bottom line results until it has completed a review with auditor KPMG over how it should account for deferred tax liabilities from cable systems it bought in 1999. Alterations could require a restatement of past income tax expense, further punishing a stock that has already plummeted more than 92% off its highs this year.
Charter shares lost 18.62% in Tuesday trading to close at $1.18.
Hampered by debt -- some $18.5 billion at last count -- Charter is in the process of trying to sell off some non-core cable systems by the end of November.
The 6.7 million subscriber MSO has struggled to maintain its customer base in a difficult quarter that is expected to continue through at least the end of the year.
Charter leads the field in terms of digital penetration of its basic cable subscribers at near 40%, but its video revenue return on all that upgrade investment has failed to relieve its heavy debt load. Digital video churn is running higher than expected, possibly due to heavy competish from DirecTV and EchoStar, and the company hinted it may reduce video marketing spend to keep profit improvements in line.
The U.S.' fourth largest cabler said it was testing a low-cost, entry-level cable package of 60 channels costing around $35-$37 a month.
