Shaw Communications Remains Challenged

• By Zacks Equity Research
• On 8:48 am EDT, Thursday October 29, 2009

Shaw Communications Inc. (NYSE: SJR - News) misses expectations in its fourth quarter of fiscal 2009. Quarterly revenue of $785 million was up 8% year-over-year, but below the Zacks Consensus Estimate of $795 million. The year-over-year improvement was primarily due to customer growth and rate increases. 

Quarterly net income was $111.6 million, or 26 cents per share compared to a net income of $129.1 million, or 30 cents per share in the prior-year quarter. Fourth quarter EPS of 26 cents was also below the Zacks Consensus Estimate of 28 cents. 

Quarterly operating income before amortization was $355 million, up 6.8% year-over-year. During the quarter, Shaw Communications generated $289.2 million of cash from operations, which was flat, compared to the year-ago quarter. Free cash flow (cash flow from operations less capital expenditures) in the same quarter was $89.1 million, compared to $139.4 million in the year-ago quarter. 

At the end of fiscal 2009, the company had $583.3 million of cash & marketable securities and $2,835.5 million of outstanding debt on its balance sheet, compared to $193 million of cash & marketable securities and $2,682.5 million of outstanding debt. During the fiscal, the company paid $316.7 million as dividend, up 15.8% year-over-year. 

Subscribers Statistics

At the end of fiscal 2009, Basic Cable customer base was 2,289,900, a net yearly addition of 29,467, while Digital customer base was 1,297,684, a net yearly addition of 388,517. Internet customer base was 1,678,335, a net yearly addition of 109,283, while DTH customer base was 900,941, a net yearly addition of 8,413. Digital phone lines were 829,717, a net yearly addition of 217,786. 

Cable Segment

Quarterly revenue of $613.8 million was up 10% year-over-year. Quarterly operating income before amortization was $295.2 million, up 9% year-over-year. 

Satellite Segment

Quarterly revenue of $171 million was up 3% year-over-year. Quarterly operating income before amortization was $60.3 million remains flat year-over-year. 

Future Outlook 

Management predicted that full fiscal 2010 operating income before amortization may increase by more than 14% year over year. Free cash flow is expected to remain same, compared to fiscal 2009.

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