UPDATE 3-Time Warner Cable subs, profit beat expectations
* Q1 EPS ex-items 75 cents vs Reuters Estimates 58 cents
* Q1 rev up 5 pct to $4.4 bln, in line with expectations
* Q1 subscriber additions above analysts' forecasts
* Warns of slower subscriber additions in early Q2
* Shares rise 12 pct in morning trading (Adds executive and analyst comment, background)
NEW YORK, April 29 (Reuters) - Time Warner Cable Inc (TWC.N), the second largest U.S. cable operator, added more subscribers than expected in the first quarter helped by the digital TV transition, sending shares up 12 percent.
While profit fell due to higher programming costs and expenses related to the company's separation from Time Warner Inc (TWX.N), after backing out special items, earnings also beat Wall Street expectations.
Time Warner Cable said on Wednesday it added 36,000 basic video subscribers during the quarter, when most analysts had expected it to lose customers due to the difficult economic environment. Analysts at Bernstein Research had expected the company to lose 51,000 basic subscribers, for example.
Time Warner Cable said it benefited from around 80,000 additions due to the U.S. digital TV transition originally scheduled for Feb. 17. The date for the analog TV switch-over has now been delayed till June 12.
"It's hard to know, but we may well see another wave of video subscriber net additions as we approach the completion of the DTV transition in mid-June," Time Warner Cable Executive Glenn Britt said on a conference call.
Chief Financial Officer Rob Marcus, however, warned that subscription growth had slowed in the early weeks of the current quarter, similar to the drop-off in sales seen in the fourth quarter.
"It's a bit early to say what this will mean for second quarter subscriber performance, but needless to say, we're very focused," said Marcus.
These are the first set of financial results by Time Warner Cable since it completely separated from Time Warner Inc (TWX.N) on March 12.
POSITIVE FOR COMCAST
Net profit fell to $164 million, or 48 cents per share, from $242 million, or 74 cents per share, a year ago.
Excluding items such as restructuring charges, profit per share was 75 cents, beating the average analyst forecast of 58 cents, according to Reuters Estimates.
"They seemed to have really turned things round during the quarter," said Thomas Eagan, analyst at Collins Stewart. "I think this portends positively for Comcast as well."
Shares in Comcast Corp (CMCSA.O), which reports its earnings on Thursday, rose 5 percent in morning trading.
Time Warner Cable added 121,000 digital video subscribers, 225,000 high-speed Internet subscribers, and 166,000 phone subscribers. These additions also beat forecasts by analysts at Bernstein Research and others.
Revenue rose 5 percent to $4.4 billion, in line with Wall Street expectations.
Video programming expenses rose 8 percent to $1.0 billion.
The cable company paid out a cash dividend of $10.9 billion to shareholders last month as part of its separation transaction. It borrowed more than $9 billion to pay out the dividend and is concentrating on using its free cash flow to help pay down the debt. Free cash flow grew 11 percent to $367 million.
Time Warner Cable said it is on target to meet its previously given full year earning per share target of $3.00. Analysts on average expect earnings per share to come in at $2.81 according to Reuters Estimates.
Shares of Time Warner Cable rose 12 percent to $30.53 in New York Stock Exchange trading. (Reporting by Yinka Adegoke; Editing by Derek Caney)
