Cablevision Systems (CVC, Financial) looks good with its turnaround strategy. It is investing heavily in product and service enhancement. Cablevision remains on track to deliver optimum experience in highly competitive environment that should help the company to hold high-quality customers going forward. Additionally it has launched various new products that should help the company capture a great market share in the future.
New products in the cards
Cablevision has recently introduced 2 new Optimum Online speed tiers. Also, it has launched Ultra 75, a 75 by 35 megabit high speed data service and tossed a trial of internet basics, a 5 by 1 megabit service in Bronx and Newark. Moreover, it is seeing strong growth for its Internet basic product that is priced at $24.95 per month coupled with a new $4.95 cable modem rental fee. Cablevision remains confident with its Internet basic products that offer the highest-speed than its competitors such as Verizon. This new product should gain traction for the company going forward.
Optimum WiFi to retain its growth momentum
Cablevision considers WiFi one of its most strategic assets that should drive long-term growth for the company. Also, it is strategically engaged in exploring new ways to monetize WiFi and advance its value as a key acquisition and retention tool. This should help the company enhance its growth in the future. At present, the company is seeing tremendous growth for its Optimum WiFi with approximately one million WiFi access points, including about 50 hotspot New Jersey transit stations. Also, these accounts now consume around 5 gigabits of wireless data on monthly basis.
In addition, Cablevision has recently rolled over a program called "Optimum Health Check." This is a self-protective maintenance program that predominantly utilizes the network’s intelligence so as to proactively recognize and address potential service issues. This program should help Cablevision improvise its service experience with the customers. Additionally, this program also facilitates the customers to schedule a health check at their convenience. The company resolves service-related issues through this program and provides optimum service experiences. This should certainly help the company retail its customers and attract likely customers to its fold in the future.
A worry
Cablevision is continuously losing its customers. The demand for traditional cable is declining as more people start watching TV through web. It had 4% drops in its video subscribers, the sixth straight quarter of decline. Also, its high-speed Internet customers fell more than half a percent to 2.7 million, while phone service subscribers had a decline of 1% to 2.2 million. The company has recently increased the cable prices that could be the reason for this decline. However, the company is able to earn more revenue per cable customer through this price increase. It witnessed about a 6% rise to $154.50 in average monthly cable revenue per customer.
Tough competition ahead
Cablevision is realizing tough going ahead as it sees rising competition in the industry. Its rival such as Verizon Communications Inc and AT&T Inc are offering improved bundled telecom and satellite TV services at competitive prices that should certainly keep Cablevision on its toes. Also, its chief executive officer, James Dolan, said, "We continued to observe significant competitive discounting, and certain portions of our footprint are still challenged by the economy.
Conclusion
Cablevision looks strong with new product offerings and investing heavily in in product and service enhancement that should augment its growth in the future. The analysts have estimated CAGR of 107.40% for next year that offer attractive short-term gain. The stock is trading at the trailing P/E of 16.75 and forward P/E of 21.63 that shares expensive valuation for the stock. Its profit and operating profit margins are 4.79% and 14.86% respectively for trailing twelve months. Its balance sheet carries total cash of $813.86 million and has huge debt of $9.72 billion. It has operating cash flow of $1.35 billion and leverage free cash flow of $364.20 million.
