Cutting Off Cablevision

Money-losing Cablevision (NYSE: CVC  ) is expected to lose more money per share in 2004 than it is already expected to lose in 2003. If the just-announced third quarter is any indication, it will.

On top of bigger losses, today the company -- which is one of the largest cable Internet operators -- disclosed greater accounting woes and admitted it will need to restate 2003 results due to improperly recorded expenses at least in 2002. The company is determining whether it will need to restate results for earlier years, too.

Excluding the quarter three restatement that should be available by the end of the month, Cablevision lost $104.6 million in the quarter, or $0.36 per share, which was worse than expected and considerably weaker than last year's $79.5 million loss ($0.26 per share). The loss grew despite a 12% gain in revenue to $976 million.

The company went on to lower its full-year expectations, and now predicts 9% to 11% sales growth, down from a previous forecast of 10% to 12%. Cablevision is nowhere near achieving free cash flow, and now 2004 will see "modestly negative" free cash flow, too, although it shared hopes to be free cash flow positive in the final quarter next year. Just five months ago, the company planned to have positive free cash flow for 2004. (Sorry, investors.)

The New York-based cable, telecom, and satellite firm blamed a slow upgrade to services as partially responsible for the letdown, alongside weak advertising revenue, the loss of basic cable subs, and increased bad debt.

With its Rainbow Media programming subsidiary in an accounting scandal, and Cablevision admitting additional cases of improper accounting today in other units, the money-losing stock begs avoidance.

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