Time Warner exchanges its 12.4% interest in TW NY Cable Holding Inc., a subsidiary of Time Warner Cable, for 80 million newly issued shares of Time Warner Cable's Class A common stock, increasing Time Warner's ownership stake in Time Warner Cable's common stock from 84% to 85.2%;
Time Warner Cable declares a one-time dividend of $10.27 per share for a total of about $10.9 billion payable immediately prior to completion of the separation;
Time Warner receives $9.25 billion from this dividend;
Time Warner Cable expects to fund the one-time dividend through its existing revolving credit facility and $9 billion from a new, committed two-year bridge term financing from a syndicate of banks;
Time Warner converts its Time Warner Cable Class B common shares (each Class B common share has the voting power equivalent to 10 Class A common shares) into Time Warner Cable common shares on a one-for-one basis in a recapitalization that results in Time Warner Cable having one class of common stock;
Time Warner will distribute its entire ownership stake in Time Warner Cable to Time Warner stockholders in a tax-efficient manner; the exact form of the distribution will be determined shortly before the closing of the transaction, based on market conditions.
This should be the start of that value unlock, and this will also clarify the balance sheets of both companies.
In a recent newsletter article, I generated an $18 scenario with a $20 target on a slightly enhanced basis. In early to mid 2009 as the economic slowdown should have been worked through, I even see a $22 to $24 upside scenario. Jon Ogg is the editor of 24/7 Wall St.'s Special Situation newsletter.
Reverse Mortgages: Beware the Come-Ons The loans can help you tap the equity in your house. Just don't get tripped up by greedy salespeople. Reverse mortgages: Beware the come-ons - MONEY
Stock futures were somewhat lower early Wednesday morning as as oil prices managed to set yet another record high, going through yet another milestone and move above $130 a barrel.
U.S. stocks plunged Tuesday, after a Labor Department report showed wholesale inflation in April rose more than forecast and as the price of oil continued to rise following a prediction from T. Boone Pickens of $150 oil. The Dow industrials fell 199 points, the S&P 500 dropped 13 points and the Nasdaq Composite dropped 23 points.
At 10:30 a.m. today, weekly crude inventories data will be released. In the meanwhile, Light, sweet crude for July delivery reached a trading record of $130.47 a barrel. It has been supply concern, rather than a lower dollar, that has been moving oil lately.
Also today, the minutes of the latest Federal Reserve meeting will be released at 2:00 pm EDT. No doubt investors will scrutinize the minutes, searching for more clues on the Fed's next step, which would hope help strengthen the dollar somewhat.
The New York Times Bits blog says that according to several label executives, Apple Inc. (NASDAQ: AAPL) has approached some of the major music labels to try to expand the variety of ringtones and other musical features for the iPhone. The negotiations are very active right now and a final deal has not been set, but will likely be during the summer, but after June 9. Ringtones are quite a profitable market, and Apple wanting to have ringtones from major label makes total sense. Apple also wants to offer Answer Tones for the iPhone.
Intel Corp (NASDAQ: INTC) said Monday its venture capital arm has invested 50 million ringgit ($16 million) in Malaysia's Green Packet Berhad to help develop the country's first nationwide high-speed WiMAX network. Already earlier this month, Intel Capital along with Google Inc (NASDAQ: GOOG), Comcast Corp (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), and Bright House Networks agreed to invest $3.2 billion into a new company to speed up deployment of the next-generation mobile WiMAX network. But that's not all. Intel Capital also expects to close half a dozen deals in India this year, its regional head said on Monday.
Warren Buffett is apparently on the prowl for another acquisition. The Oracle of Omaha has begun his European tour Monday, looking for possible acquisitions for his Berkshire Hathaway Inc. (NYSE: BRK.A).
As soon as Richard Parsons gave up his CEO role in January, remaining chairman of Time Warner Inc. (NYSE: TWX), the smart money bet that his tenure would be short-lived. After all, he had turned over the fun part of the job to Jeffrey Bewkes.
Today, at the annual shareholder meeting, Parsons said he would likely give up his role as chairman after this year. This will mean Bewkes gets the chairman title affixed to his CEO tag. In fact, his contract stipulates being able to become chairman.
This is more than a title change. It will consolidate the decision-making power and the public's perception of who is in charge with Bewkes. It may even allow Bewkes to more expeditiously get Time Warner Cable Inc. (NYSE: TWC) out of the structure.
For Parsons, it will mean a fresh start. He has long been thought of as a candidate for Mayor in New York City. Handing the chairmanship of Time Warner over to Bewkes would allow Parsons to pursue that.
MOST NOTEWORTHY: Comcast, Time Warner Cable, YRC Worldwide and Syniverse were today's noteworthy upgrades:
Soleil upgraded shares of Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) to Buy from Hold on improving fundamentals, as they believe the economic stimulus package should drive consumer demand in 2H08.
Stephens upgraded shares of YRC Worldwide (NASDAQ: YRCW) to Overweight from Underweight as they believe management is making meaningful changes.
Syniverse (NYSE: SVR) was raised to Overweight from Neutral at JP Morgan. The firm upgraded shares based on accelerating organic growth from consumer wireless data usage.
OTHER UPGRADES:
Deutsche Bank upgraded NYSE Euronext (NYSE: NYX) to Buy from Hold.
U.S. stock futures were lower early Wednesday as investors, worried about inflation, await data on pending home sales and labor costs. Earnings news in focus this morning comes from tech bellwether Cisco Systems, which gave a cautious outlook, and from Walt Disney, which reported good results.
Despite starting the day on a down note, as oil futures remained high, U.S. stocks closed higher on Tuesday, mostly due to some reassuring comments made on a Fannie Mae (NYSE: FNM) conference call. The Dow industrials ended up 51 points, or 0.40%, the S&P 500 rose 10 points, or 0.77%, and the Nasdaq Composite finished 19 points, or 0.78%, higher.
Today investors will finally have some data to sink in their teeth. First quarter labor productivity and unit costs is out at 8:30 a.m. EDT. Economists expect productivity to rise 1.5% in the first quarter, but for unit labor costs to climb as well.
Also on the docket today are March pending home sales data to be released at 10:00 a.m. and which probably fell another 1%.
After that, weekly crude inventories are scheduled to be reported. Crude futures have held up near $122 a barrel despite the dollar advancing against the yen and the euro.
First, shares rose this morning as investors gave a thumbs up to Chief Executive Jeff Bewkes' plan to dispose of the media conglomerate's cable television business. Then, they fell after the earnings conference call. Perhaps investors were expecting news on a deal for AOL. Otherwise, the parent of CNN, Time magazine and Warner Brothers posted mediocre quarterly results (pdf).
"We've decided that a complete structural separation of Time Warner Cable Inc. (NYSE: TWC), under the right circumstances, is in the best interests of both companies' shareholders, Bewkes said in the earnings release. "We're working hard on an agreement with Time Warner Cable, which we expect to finalize soon."
This has been a busy morning for Time Warner Inc. (NYSE: TWX). The company announced earnings and also unveiled a plan for the divestiture of Time Warner Cable Inc. (NYSE: TWC).
First, Time Warner posted earnings (click here for the pdf file) of $0.22 EPS on revenues of $11.42 billion; First Call had estimates at $0.23 EPS and $11.39 billion in revenues. The company also reaffirmed (pdf) the 2008 guidance of $1.07 to $1.11 EPS (First Call is $1.09), and it sees 7% to 9% growth in OIBDA from the $12.9 billion base in 2007. As a result of a tax benefit, the company also sees 2008 cash flow at or above $4.5 billion.
Time Warner Cable beat estimates (pdf) in its first quarter report, with $0.24 EPS from operations and an 8% revenue rise to $4.16 billion; First Call had estimates of $0.22 EPS on $4.14 billion in revenues. Time Warner Cable also reaffirmed its guidance (pdf) for fiscal 2008, projecting a revenue growth rate of 9%, to $17.25 billion, and EPS between $1.25 to $1.30. First Call estimates are $1.27 EPS and $17.25 billion in revenues.
Now for the fun part, from the department of "Thank Heavens!" -- Time Warner Cable is going to be split off from Time Warner Inc. While the detailed spin-off plan wasn't available, the goal here looks to be a complete separation. CEO Jeff Bewkes noted that the companies expect to finalize an agreement soon. Based on roughly an 84% stake and a current market cap of $27.3 billion, the structure could be the most important part of this divestiture. This could amount to a difference of almost $23 billion for the parent, and it will also bring about some serious de-leveraging of the books as much of the debt belongs to the cable operations.
So far there is an inversion in share reaction, with Time Warner shares down 1% and Cable shares up 1%.
On Wednesday morning pre-market, we'll get to see earnings out of Time Warner Cable Inc. (NYSE: TWC). The estimates for the cable giant from First Call are $0.22 EPS on $4.15 billion in revenues. Next quarter estimates are $0.34 EPS on $4.31 billion in revenues. Estimates for fiscal Dec-2008 are $1.27 EPS on $17.25 billion in revenues.
Analysts have an average price target north of $34.00. In late January, UBS initiated to a neutral rating and in early February, Cowen & Co. initiated with a neutral rating as well.
After trading in the upper thirties and low forties early last summer, the stock has been consistently trading in the mid-twenties over the last six months. Time Warner Cable's 52-week trading range is $21.95 to $42.11.
Last Wednesday, Time Warner Cable was among one of four cable companies to pull out of a joint venture with Sprint Nextel (NYSE: S), called Pivot. Pivot was an attempt for telephone and cable companies to compete with multiple providers, such as AT&T Inc. (NYSE: T) uVerse and the service from Verizon Communications (NYSE: VZ). Verizon's strong earnings this morning were driven partially by its fiber-optic TV service. FiOS drove the revenue growth, with customer additions to reach a total of 1.2 million customers.
Hottest Stocks of 2008 (so far) Some surprising names have performed well this year--and they have room to run. They include Allied Irish Banks, Home Depot, Lowe's, American Express, Time Warner Cable, Vulcan Materials and Verizon. The Hottest Stocks This Year - Morningstar Stock Strategist
Worst Places for Homeowner's Debt It's no secret that homeowners with subprime mortgages have taken a beating. Next up: those who have combined their mortgages with home equity loans, second loans or both. These combinations spell especially bad news for homeowners with the worst city being Sacramento. Other cities with high homeowner debt include San Diego, Washington DC and Colorado Springs. Worst Cities For Homeowner Debt - Forbes.com
While in Silicon Valley recently, I had a chance to meet up with Tony Conrad, who is a venture capitalist. We talked about one of his ventures, Sphere, which got its start in 2005.
There was an interesting announcement that came out this week. It seems that the triple-play package of cable, high-speed internet, and telephony are coming to America's largest retailer.
The store offerings will be in the electronics department or "Connection Center" locations inside the stores. These locations will explain and offer the packages, possibly with a joint purchase of a new high-definition television.
Time Warner believes this will give customers convenient and easy access to its broadband, high-definition cable, and digital phone services. After seeing VoIP offerings in the past, this might not be all that unexpected. But the triple- play package isn't exactly a bare-bones pricing, even if it ultimately does save money for consumers who use all three services under one provider.
For the former "Always Low Prices" retailer, it seems that the old dial-up or low-priced DSL internet access would have been the highest priced offering. Either times are a changing, or US web access markets are saturated.
We are still awaiting the final verdict from Time Warner Inc. (NYSE: TWX) and Jeff Bewkes regarding its majority stake in the cable operator.
Verizon (NYSE:VZ) says that Time Warner Cable (NYSE:TWC) is lying in its advertising. According toThe Wall Street Journal, "Verizon says that Time Warner Cable's ad implies FiOS requires a satellite dish for TV service and that it isn't able to bundle together high-speed Internet, video and phone calls."
The problem, of course, is much deeper than one ad. Verizon has spent $23 billion to put fiber in front of its 18 million customer homes. In the process it hopes it can take TV and high-speed Internet customers away from cable companies and satellite TV firms. If the product does not do well, there will be hell to pay in the Verizon executive suite.
Cable company stocks have fallen over the last three quarters, to a large extent due to the fear that they now have real competition for packages for voice, TV, and broadband, known fondly as the "triple play". Verizon does not have to get a huge number of cable customers to switch to do some real P&L damage. Early indications are that consumers like the fiber service. Because it can deliver more bandwidth it can offer larger numbers of HD channels.
The court fight over the ad makes for nice newspaper copy, but the real fight ends up being one for shareholder value. Time Warner Cable's stock is down 30% in the last year.
Douglas A. McIntyre is an editor at 247wallst.com.
Stock futures were somewhat lower early Wednesday morning as as oil prices managed to set yet another record high, going through yet another milestone and move above $130 a barrel.
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Here are some highlights from this past week's 
Investors don't know what to make of 
This has been a busy morning for 
While in Silicon Valley recently, I had a chance to meet up with Tony Conrad, who is a venture capitalist. We talked about one of his ventures, 
Verizon
Are we running out of oil?
Can Buffett's Moody's survive?
Gamestop (GME) getting fragged despite record Q1 earnings
