Stock of the Day
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Shaw Communications (SJR)
Shaw Communications Rides the Success of Digital Subscribers
Shaw Communications Incorporated (SJR: Charts, News, Offers), the Canada-based telecommunications company, announced an increase in its third quarter earnings today. Its net income jumped from $128.1 million a year ago to $131.95 million while its revenue grew to $861.4 million from $792.2 million. Shaw's quarterly performance was just about on pace with Wall Street expectations. The Thomson Reuters mean estimate was for a profit of 32 Canadian cents a share as compared to Shaw's actual 31 Canadian cents a share. How was Shaw Communications Inc. able to post such strong profit totals in today's challenging economy?
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| Stock Analysis |
A big contributor to Shaw's quarterly performance was its increase in digital subscribers. Over the past few years, Shaw Communications has been focused on increasing the breadth of its digital offerings, and its efforts seem to be generating a positive response from consumers. Shaw set the record for a quarterly gain in digital customers as digital cable subscribers increased 110,810 users to 1.19 million total subscribers. It also saw expansion with its digital phone line and internet services. However, it was not only the digital subscribers that were on the rise.
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Although Shaw's digital business was responsible for a majority of its subscriber growth, other services experienced subscription list success too. The basic cable subscribers grew 9,622 users to a grand total of 2.28 million, and Shaw also reported that its direct-to-home phone customers increased. Overall subscription service growth during the quarter accounted for almost all of Shaw's 8.7% increase in service revenue. In addition, Shaw raised the prices on a lot of its service offerings. The combination of increased service rates and total subscribers helped lead Shaw to its promising quarter performance.
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Overall, Shaw has done a nice job of harvesting subscribers for its various service offerings, especially digital. The digital service business is developing at an impressive rate, and its growth has been complimented nicely by Shaw's other services. However, eventually the subscription list growth will plateau, and Shaw Communications will have to find an alternative means to increase revenue. Shaw Communications is enjoying its current success at the moment, but only time will tell how it will respond to this fast approaching dilemma.
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Profile |
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