Liberty Global Beats Zacks Estimate - Analyst Blog

Yesterday, after market closed, Liberty Global Inc. (LBTYA) declared financial results for the third quarter of 2010, beating the Zacks Consensus Estimate.

Quarterly GAAP net income from continuing operations was $317.6 million or an income of $1 per share compared to a net loss of $94.4 million or 46 cents per share in the prior-year quarter. EPS of $1 per share was significantly higher than the Zacks Consensus Estimate of a net loss of 11 cents per share. This was mainly due to a $726.1 million of gain in foreign currency transaction.

Quarterly total revenue of $2,246.8 million was an improvement of 16.4% year over year and exactly in line with the Zacks Consensus Estimate. Year-over-year growth of the top-line was primarily due to consolidation of Unitymedia operations.

Quarterly cost of operation was $802.1 million, up 10.4% year over year. Selling, General and Administrative expense was $390.8 million, up 10.2% year over year. Third quarter of 2010 operating income was $446.7 million, up 44.5% year over year.

During the first nine months of 2010, Liberty Global generated $1,573.6 million of cash from operations compared to $2,280.4 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) during the same period was $276.3 million compared to $1,040.6 million in the prior-year period.

At the end of the reported quarter, Liberty Global had $4,210.4 million of cash & marketable securities and $22,058.1 million of outstanding debt on its balance sheet compared to $4,278.2 million of cash & marketable securities and $25,852.6 million of outstanding debt on its balance sheet at the end of fiscal 2009. Debt-to-capitalization ratio was 0.87 compared to 0.80 at the end of fiscal 2009.

Subscriber Statistics

At the end of the quarter, Liberty Global had 17.6625 million customers in 14 countries, up 32% year over year. UPC Broadband customer was 13.4225 million, up 47.5% year over year. Telnet customer base was 2.2882 million, down 3.2% year over year. VTR customer count was 1.0688 million, up 1.7% year over year. Other segment customers totaled 883,000, up 1.7% year over year.

During the reported quarter, Liberty Global net added 167,000 RGUs (revenue generating units) consisting of net gain of 147,000 and 110,000 subscribers, respectively, for broadband Internet and telephony services and a net loss of 90,00 subscribers for the video services.

Total Single-Play customer base was 11.4591 million, up 36.4% year over year. Total Double-Play customer base was 2.6151 million, up 9.7% year over year. Total Triple-Play customerbase  was 3.5883 million, up 38% year over year.

Segment Results

Revenue from total UPC Broadband division was $1,327.9 million, up 226.17.9% year over year. Within this segment, revenue from Western Europe was $1,058.2 million, up 39.4% year over year. Revenue from Central and Eastern Europe was $269.5 million, down 8.3% year over year. Revenue from Central operation was $0.2 million.

Telnet revenue was $425.7 million, down 2.6% year over year. VTR revenue was $205.8 million, up 14.5% year over year. Austar revenue was $162.8 million, up 15.4% year over year. Corporate and other revenue was $144.3 million, up 3.2% year over year.

In the after-market trade on NASDAQ, stock price of Liberty Global was down 13 cents (0.34%) to $38.13. We maintain our long-term Neutral recommendation for Liberty Global. Currently it is a short-term Zacks #3 Rank (Hold) stock.