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.
What: Shares of Time Warner Cable (NYSE: TWC) fell 12% today after the company issued weak earnings guidance.
So what: Fourth-quarter revenue rose 9.9% to $5.5 billion and earnings per share of $1.57 beat estimates by $0.02. But investors are more concerned about the 2013 earnings forecast of $6.33 to $6.61, which fell well below the $6.91 bar set by Wall Street.
Now what: Time Warner's costs are rising because of huge sports deals, and investors already have the decline of cable in the back of their minds, so disappointing guidance isn't good. I'm staying away from this stock because I just don't see the long-term value in cable networks that may be replaced by on-demand sources. Time Warner still offers some valuable services to consumer,s but the long-term trends aren't in its favor right now.
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