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Charter is launching a tender offer, which is an invitation for investors to sell their bonds back to the company for cash before they are actually due. This offer covers eight different series of notes issued by its operating subsidiaries. This is a routine way for a company with a lot of debt to manage its interest costs and repayment schedule. By buying back these notes now, Charter can reduce its total debt load or clear the way to borrow at different rates later. For long-term owners, this shows the company is actively managing its balance sheet after its recent large acquisition.
Source: PRNewsWire
After Charter Communications reported its November results, we updated our fair value and cut our quality score to 2.1. We lowered our rating for how well protected the business is from competitors and for how much profit it makes on the money it invests. We added the Cox Communications and Liberty Broadband acquisitions and the two billion dollar cost-cutting plan to what we track. We also adjusted our revenue projections after what a customer spends per month fell by 1.6 percent.
Charter reported a heavy loss of $20.50 per share this quarter, far worse than the $8.90 profit analysts expected. While revenue of $14.92 billion actually came in ahead of targets, the bottom line was hit by the costs of reorganizing the business. The company is launching a new operating model to integrate its recent purchase of Cox Communications, a fellow cable provider, more quickly.
To offset the losses, management is targeting $2 billion in yearly savings on top of the $1 billion it already expected to save by combining with Cox. The goal is to use its larger scale to sell more mobile and internet bundles. For long-term owners, the success of this plan is critical to proving that the company can still generate cash while its traditional cable TV business shrinks.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Charter's business arm is launching a new networking service designed to protect companies from security threats that use artificial intelligence. The service uses high-end Cisco routers and includes a managed support team to handle the technical setup and monitoring for the customer. While Charter is mostly known for home internet, its business division is an important source of steady revenue. Offering specialized security tools like this makes its service harder for companies to switch away from, which helps keep its business customer base stable even as the home internet market gets more competitive.
Source: PRNewsWire
On October 26, the board approved a pay package for Kevin Howard to serve as Interim Chief Financial Officer, including an annual salary of 925,000 dollars and a stock award. He is stepping into the role while the company searches for a permanent successor.
While an interim appointment is a temporary fix, it keeps the company's financial leadership stable during a period of heavy network investment. A permanent hire will eventually be the one to watch for long-term strategy on debt and share buybacks.
Source: 8-K filing
Management has missed profit targets in five of the last eight quarters, and a massive recent loss shows they are struggling to keep up with the cost of merging with Cox.
| Expectation | |
|---|---|
| EPS | $9.51 |
| Revenue | $16.30B |
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