Yesterday, after market close, Liberty Global Inc. (LBTYA) declared mixed financial results for the fourth quarter of 2010. Quarterly GAAP net income from continuing operations was $96.2 million or 15 cents per share compared with a net income of $458.1 million or $1.25 per share in the prior-year quarter. The fourth quarter of 2010 adjusted (excluding special items) EPS of 20 cents was also below the Zacks Consensus Estimate of 27 cents.

Quarterly total revenue of $2,425.6 million was an improvement of 17.8% year over year, surpassing the Zacks Consensus Estimate of $2,403 million. Year-over-year growth of the top line was primarily due to consolidation of Unitymedia operations.

Quarterly cost of operation was $918 million, up 14.2% year over year. Selling, General and Administrative expense was $468.9 million, up 17.1% year over year. In the fourth quarter of 2010, operating income was $417.8 million, up 45.1% year over year.

During fiscal 2010, Liberty Global generated $2,280.2 million of cash from operations compared with $3,353.3 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) during fiscal 2010 was $489.1 million compared with $1,673.7 million in fiscal 2009.

At the end of fiscal 2010, Liberty Global had $4,921.1 million of cash & marketable securities and $22,462.6 million of outstanding debt on its balance sheet compared with $4,278.2 million of cash & marketable securities and $25,852.6 million of outstanding debt on its balance sheet at the end of fiscal 2009. At the end of fiscal 2010, debt-to-capitalization ratio was 0.86 compared with 0.80 at the end of fiscal 2009.

Subscriber Statistics

At the end of 2010, Liberty Global had 17.6431 million customers in 14 countries, up 32% year over year. UPC Broadband customer was 13.4151 million, up 47.4% year over year. Telnet customer was 2.2744 million, down 2.9% year over year. VTR customer was 1.0686 million, up 1.4% year over year. Other segment customer was 885,000, up 1.9% year over year.

During the reported quarter, Liberty Global added 319,000 net RGUs (Revenue Generating Units) including net gain of 199,000 and 157,000 subscribers respectively for broadband Internet and telephony services and a net loss of 37,000 subscribers for the video services.

Total Single-Play customer was 11.2583 million, up 36.6% year over year. Total Double-Play customer was 2.6405 million, up 9.3% year over year. Total Triple-Play customer was 3.7443 million, up 38.2% year over year.

Segment wise Results

Revenue from total UPC Broadband division was $1,430.9 million, up 28.8% year over year. Within this segment, revenue from Western Europe was $1,142.1 million, up 41.3% year over year. Revenue from Central and Eastern Europe was $289 million, down 4.3% year over year. Loss from Central operation was $0.2 million.

Telnet revenue was $452.2 million, down 2.9% year over year. VTR revenue was $219.1 million, up 13.8% year over year. Austar revenue was $177 million, up 13% year over year. Corporate and other revenue was $165.8 million, up 8.3% year over year.

Recommendation

We maintain our long-term Underperform recommendation on Liberty Global. Currently, it holds a short-term Zacks #5 Rank (Strong Sell) on the stock.

 
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