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Shares of Time Warner (NYSE: TWX ) are down yet again today. If the trend holds, it'll be the 10th consecutive down day for the stock, even as the media giant reported better-than-expected second-quarter financial results yesterday.
"As you saw in our outlook released [yesterday] morning, we remain fully on track to meet, if not exceed, our guidance for the full year," CEO Jeff Bewkes said in prepared remarks made during the quarterly call with analysts.
Have investors become so jaded that even good results are meaningless? So it would seem. Revenue rose 10.2% to $7.03 billion, while adjusted earnings rose to $0.60, up 10 cents from last year's second quarter. Analysts were calling for $0.56 a share on $6.82 billion in revenue, according to data compiled by Yahoo! Finance.
Most impressive, I think, is that these results came while Warner Bros. movies suffered a tough quarter at the box office, led by Green Lantern's underpowered performance. Filmed Entertainment saw operating income decline 11% despite a 13% increase in revenue.
TV networks made up the difference. Revenue from the segment that includes the alphabet soup known as TBS, TNT, CNN and HBO increased 9%, while operating profit improved 4%. Publishing revenue grew 3%, resulting in a 10% gain in earnings for the segment.
What's interesting to me as an investor is that Time Warner grew even as it spent big to improve its content library in key areas. Original programming and sports costs rose 16% during the quarter, yet if HBO proves anything it's that original content sells when done right. Time Warner is capitalizing on this truism with HBO Go, its mobile app that apes Netflix (Nasdaq: NFLX ) in delivering programming to subscribers wherever they may be.
Meanwhile, at 15 times earnings, the stock trades for less than direct peer Walt Disney (NYSE: DIS ) and slightly more than slower-growth News Corp. (Nasdaq: NWS ) , which remains embroiled in controversy. Neither traders nor investors seem to care, but I'm sticking with the buy thesis I offered in April.
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