Stock Market Today: A Mega Merger in the Cable Industry

Why Time Warner Cable, Discovery Communications, and Goodyear stocks are on the move today.

Feb 13, 2014 at 9:00AM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Investors can expect a weak start to the stock market today, as the Dow Jones Industrial Average (DJINDICES:^DJI) lost 71 points, or 0.5%, in premarket trading. Global shares fell in overnight trading, led by a 1.8% drop in Japan's Nikkei index. Federal Reserve Chairwoman Janet Yellen's second day of testimony to Congress, which was set for today, has been postponed on account of the winter storm blanketing the Washington, D.C. region.

Meanwhile, news is breaking this morning on several stocks that could see heavy trading in today's session, including Time Warner Cable (NYSE:TWC), Discovery Communications (NASDAQ:DISCA), and Goodyear Tire & Rubber (NASDAQ:GT).

Time Warner Cable is being acquired, but not by Charter Communications (NASDAQ:CHTR). Instead, Comcast (NASDAQ:CMCSA) has agreed to purchase the nation's second largest cable company in an all stock deal valued at $45 billion, the two announced this morning. Time Warner shareholders will receive $159 per share of stock in the combined company, almost exactly what the cable operator's management had said Time Warner was worth. Charter had bid closer to $130 a share. Time Warner's stock is up 11% in premarket trading, while Charter's stock is down 8%.

Discovery Communications today posted fourth-quarter earnings results in which sales jumped by 28%, to $1.5 billion. That bounce was driven by growth in its international business, which improved by 64% while its U.S. networks ticked higher by a more modest 5%. Adjusted profit grew to $0.92 a share, slightly ahead of the $0.89 that analysts had targeted. Discovery provided a strong outlook for 2014, saying sales should improve by about 20% to as much as $6.6 billion. The stock is down 1.2% in premarket trading.

Finally, Goodyear this morning announced that revenue fell by 5% last quarter, to $4.8 billion. The company saw tire unit volume tick higher by 2%, but that growth was overwhelmed by a big drop in chemical sales. Still, profitability improved as the company logged a record $419 million of operating income, up 54% on price increases. This led to an almost doubling of operating margin in the U.S., to 9.3%. Goodyear also affirmed its guidance for 2014, saying that sales volume should improve by between 2% and 3%, powering a 10%-15% rise in profit. The stock is up 2% in premarket trading.

Three forever stocks
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 


Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information