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Internet Subscribers Help Charter Cut Loss

August 01, 2003|From Bloomberg News

Charter Communications Inc., the third-largest U.S. cable-television provider, posted its smallest quarterly loss since 1999 as sales of high-speed Internet access surged more than 70%.

The second-quarter net loss shrank to $37 million, or 13 cents a share, from $160 million, or 55 cents, a year earlier, St. Louis-based Charter said. Revenue rose 7% to $1.22 billion from $1.14 billion.

Charter, controlled by billionaire Paul Allen, added 76,700 customers for Web service through the company's cable lines and reduced capital spending by 73%.

But Charter, which serves Los Angeles among other markets, is struggling with $18.9 billion in long-term debt, four years of net losses and accusations that former executives inflated sales and subscriber figures.

"I think they're starting to straighten out," said Seth Glickenhaus, senior partner at investment firm Glickenhaus & Co. "The Internet is working out and that's a vital part of it."

Charter's capital spending on property and equipment declined to $160 million from $603 million a year earlier. That helped boost free cash flow to $56 million, compared with a free-cash-flow loss of $432 million a year earlier.

Chief Executive Carl Vogel said during a conference call with analysts that he expected less than $900 million in capital spending this year, compared with a previous forecast for as much as $1.1 billion.

Charter shares rose 5 cents to $4.85 on Nasdaq. The stock's value has more than quadrupled this year.

Charter was expected to post a net loss of 49 cents a share on sales of $1.23 billion, the average estimate of seven analysts in a Thomson First Call survey. Per-share results reflect the payment of preferred dividends.

Satellite-TV services offered by EchoStar Communications Corp. and DirecTV, a unit of General Motors Corp., have been taking customers from Charter because its management has been distracted by debt and investigations of its accounting, analysts have said.

Charter had 1.35 million customers for its high-speed Internet service at the end of the quarter. Revenue from high-speed Web service climbed to $136 million.

Prosecutors have said Charter isn't a target of a U.S. investigation that led to the indictment of four former executives this week.

Former Chief Financial Officer Kent Kalkwarf and ex-Chief Operating Officer David Barford on Tuesday pleaded not guilty to charges that they conspired to defraud Charter investors. They and two other former Charter executives are accused of inflating revenue and cash flow by $17 million in 2000 and overstating subscribers in 2001.

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