Following the foot steps of The Home Depot Inc.’s (HD), the world’s largest home improvement specialty retailer, offer of $2.0 billion senior note and Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, enhancing its pre-announced senior notes offering to $1.0 billion from $750.0 million, Time Warner Inc. (TWX), the diversified media conglomerate, announced the sale of debt through notes and debentures.
The offering is expected to close on April 1, 2011.
The issue, with a guarantee of Historic TW Inc., is of $1.0 billion senior debts at 4.75% with a price of 98.943% of their face value, carrying a due date of 2021 and of $1.0 billion 6.25% debentures at a price of 98.707% of their face value with a due date of 2041.
The announcement reflected the company’s strategic approach to utilize the amount from the offering for common business purposes while boosting the shareholders’ return through share repurchases and business expansion.
Earlier, Time Warner posted better-than-expected fourth-quarter 2010 results on the heels of an increase in advertising and subscription revenues. Buoyed by the strong quarterly performance, the company now expects fiscal 2011 earnings to increase in the low teens. The company also hiked its quarterly dividend and boosted its share repurchase program.
Time Warner’s significant international presence has helped to broaden its client base and product portfolio. Time Warner operates in the United Kingdom, Germany, Canada, France, Japan and other countries apart from the United States. We believe that its strong international exposure will drive growth in the coming quarters.
The company derives substantial revenue from advertising, which in turn, depends upon the health of the economy. During recession, it has been seen that the demand for advertising dropped. Publishing companies have been grappling with the slump in print advertising demand, with advertisers migrating to the Internet driven by increasing online readership and lower ad prices online than print
Currently, we have a long-term ‘Neutral’ rating on the stock. However, Time Warner, which competes with News Corporation (NWSA) and Walt Disney Company (DIS), holds a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating.
DISNEY WALT (DIS): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
LIMITED INC (LTD): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
TIME WARNER INC (TWX): Free Stock Analysis Report
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