Shaw Q4 Revenues Up, Profits Down

by Gaurav Kheterpal on October 21, 2011

In June, I wrote a post covering Shaw’s Q3 financial performance. Back then, I mentioned that the year 2011 has been a mixed bag for the company. Though it posted better-than-expected third-quarter earnings and revenue, thanks partly to layoffs and other cost-cutting measures, there have been plenty of down points as well.

Most significantly, Shaw last month dropped its plans for a wireless telephone network and instead announced that it would build a cheaper Wi-Fi service. The move caught most industry analysts by surprise and they claimed that ditching wireless plans would hurt the company badly.

And that’s precisely what has happened – Shaw Thursday reported a lower Q4 profit, reflecting a wider loss from discontinued wireless operations, despite a 26 percent growth in revenues. The company expects revenue to grow but cash flow to decline “somewhat” in its 2012 fiscal year.

First, a quick look at Shaw’s key Q4 figures. The company’s revenues for the quarter grew to 25.8 percent to C$1.18 billion from C$938.87 million in the same quarter last year while net income attributable to shareholders declined to C$80.71 million from C$121.57 million reported last year. Overall Q4 profit fell by 32 percent. It is believed that the decision to kill its wireless business cost Shaw another $83.7 million, or 19 cents a share, in the most recent quarter.

However, Chief executive Brad Shaw remains confident that the company is ‘well-positioned to move forward‘. He defended Shaw Media’s weaker-than-expected performance stating that Q4 is generally a slow quarter for all media companies. He attributes the overall increase in revenues to the broadcasting acquisitions as well as price changes and growth in the company’s cable and satellite divisions.

“I am pleased to report we ended the year meeting all of our financial commitments,” Shaw said. “Our performance in the fourth quarter was highlighted by solid operating income growth in the cable division and margin improvement. Shaw is a dynamic company, a successful operator, a technology leader, and we have a proven track record of making sound financial investments for all of our stakeholders. Our decision to not pursue a conventional wireless business is consistent with our strategic DNA.”

Shaw spent $190 million in a government auction in 2008 for spectrum purchase. IMO, the decision to abandon WiFi plans in favor of a establishing an extensive WiFi network is like picking apples in favor of oranges.

On another note, Shaw yesterday announced that is has reached a long term agreement with Bell Media covering 30 Canadian programming services including some of the most popular services like TSN, TSN2, RDS, Space and Discovery Channel. The company claims it’s a positive sign that Canada’s major media rivals are also capable of working together.

Overall, Shaw maintains that it has rounded off a strong year but continues to adopt a cautious outlook for 2012.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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