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Charter Posts Another Quarter in the Red As Basic Cable Subs Slump

8/05/2008 10:17 AM Eastern

Charter Communications Tuesday said it posted a second-quarter loss of $276 million, or 74 cents a share, on sales of $1.62 billion compared to a loss of $360 million, or 98 cents a share, in the year-ago quarter.

The $1.62 billion in sales represents an 8% improvement from the second quarter of 2007, but still fell just short of analysts’ consensus estimate of $1.63 billion.

Charter shares were off 2 cents a share, or 2%, to $1.12 in early-afternoon trading Tuesday.

In the quarter, Charter said it added 98,900 new customers, bringing the nation’s third-largest cable operator’s total customer base to more than 12.2 million subscribers.

The company added another 90,500 telephone customers, up 70 percent from the same period last year. Its base of digital cable subscribers increased by 33,900 but was more than offset by the loss of more than 44,800 basic cable subscribers.

Average revenue per subscriber improved 12% to $104.35, a surge the company attributed to the increased sales of bundled services.

“Our solid financial performance in the second quarter is a result of our consistent strategies to increase bundled penetration, enhance products and services and improve the customer experience,” CEO Neil Smit (pictured) said in a statement accompanying the financial results. “Our priorities are to deliver healthy financial growth, leverage infrastructure investments and capture new growth opportunities.”

Operating expenses, which include programming, service and advertising sales costs rose 8.7% on a pro forma basis in the quarter to $698 million. Selling, general and administrative expenses increased 7.4% on a pro forma basis to $334 million, reflecting “expenditures to improve the customer experience and increased marketing expenditures targeted at revenue growth and retaining customers,” company officials said.

Three of the six analysts covering the stock rate it a “buy” or “strong buy” while the other three maintain either “hold” or “underperform” recommendations.

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