The year 2011 has been a mixed bag for Shaw Communications. In March, the company laid off 500 employees in Western Canada as a part of “corporate restructuring,” a catch-all term that essentially refers to moves a company makes to create more profit. Last month, it was forced to change its pricing plans in response to public outcry.
Yesterday the company posted better-than-expected third-quarter earnings and revenue, thanks partly to layoffs and other cost-cutting measures. Shaw reported that the revenue for the three month period was $1.82 billion, up 36% over the same period last year. Profits improved 28% from a year earlier.
Shaw also announced that no longer plans to launch its own sports channel, primarily due to the high startup costs involved. However, the company chose to stay mum on its already-delayed wireless launch.
“We are very pleased with our Q3 results, which reflect an improvement over the second quarter and incorporate cost-savings that resulted from actions we announced and undertook at the end of March to streamline our business,” said Brad Shaw, who took as Shaw CEO in November.
Though overall revenue and profits increased, Shaw continues to lose subscribers in the lucrative cable business. The chief beneficiary – Telus gained substantial market share as Shaw focused on stepping up the prices to stem slipping revenues per subscriber. Shaw lost 13,500 basic cable subscribers. Though it added 11,165 Internet customers and 31,404 telephony subscribers, these figures are well short of expectations. Restructuring costs helped Shaw save $29 million, while the annual savings were more than $50 million.
Shaw said it plans to make new Internet packages available in the next 16 months as it upgrades its network.
The worrying aspect for Shaw is that there’s been no significant progress on its wireless infrastructure build-out, and the company doesn’t have a firm launch date in sight. The company bought wireless spectrum in a 2008 government auction, but has been a slow-mover as compared to other new entrants (Mobilicity, Wind Mobile and Public Mobile) that have already made their presence felt in the Canadian wireless arena.
Investors were expecting that Shaw might announce a decision on its wireless strategy with its third-quarter release. Since the company has chosen to stay mum over this subject, it’s being speculated that Shaw’s wireless network may not make its much anticipated debut early next year.
Shaw also announced that its subsidiary Shaw Media Inc. intends to redeem all of its outstanding US$260,380,000 face amount of 13.5% Senior Notes due 2015, which notes have a total Accrued Value of approximately US$282 million.