UPDATE 2-Time Warner Cable profit rises, but outlook weak

(Adds CEO comment, byline, stock activity)

By Paul Thomasch

NEW YORK, Feb 6 (Reuters) - Time Warner Cable Inc (TWC.N), the second-largest U.S. cable operator, on Wednesday posted a better-than-expected 23 percent rise in quarterly profit, but warned that 2008 earnings would fall below expectations.

The outlook, which sent Time Warner Cable's shares sharply lower before they recovered, comes as investors wait for answers by parent Time Warner Inc (TWX.N) about plans for its 84 percent stake in the cable company.

Time Warner Inc. said on Wednesday only that the companies were talking about changes to the ownership structure.

As for 2008, "we recognize we are facing robust competition and a very uncertain economy," Time Warner Cable Chief Executive Glenn Britt said on a conference call.

For the year, the company forecast earnings per share of $1.25 to $1.30 from continuing operations, while analysts on average were expecting $1.37, according to Reuters Estimates.

Time Warner Cable forecast revenue growth of about 9 percent for the year from almost $16 billion in 2007.

The U.S. housing downturn has dragged on subscriber growth for Time Warner Cable as it meant higher numbers of unoccupied homes. The company has also instituted more stringent credit standards in anticipation of economic troubles, which has kept bad debt level steady but also pushed some potential customers out of the fold.

Economic concerns have also pushed Time Warner Cable's shares down more than 30 percent in the last six months.

Time Warner Inc spun off a 16 percent stake in Time Warner Cable a year ago as partial payment for cable systems it bought in July 2006 from bankrupt operator Adelphia Communications Corp. Time Warner Inc's newly appointed chief executive, Jeffrey Bewkes, acknowledged on Wednesday that the ownership structure was "less than optimal" for both companies, but did not provide the concrete details some investors had craved.

QUARTERLY RESULTS

In the fourth quarter, Time Warner Cable's net profit rose to $327 million, or 33 cents per share, from $266 million, or 27 cents a share, a year earlier. The results beat the analysts' average forecast by 2 cents a share.

The company said it had benefited from higher numbers of broadband and digital phone customers.

Revenue rose 12 percent to $4.1 billion, compared with Wall Street's forecast of $4.13 billion.

Time Warner Cable said it had added 168,000 digital video subscribers and 214,00 high speed Internet customers during the quarter, ahead of some expectations.