Analysis of Reportable Segments
Time Warner Cable Inc. operates in 3 segments: Residential Services; Business Services; and Other Operations.
Segment Profit Margin
Time Warner Cable Inc., profit margin by reportable segment
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Residential Services | 44.76% | 46.75% | 47.21% | 47.93% | — |
| Business Services | 60.51% | 60.57% | 58.43% | 59.02% | — |
| Other Operations | 38.89% | 44.41% | 52.00% | 57.95% | — |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The profit margin data for reportable segments displays distinct trends across the three segments from 2012 through 2015.
- Residential Services
- The profit margin for Residential Services shows a gradual decline over the observed period. Starting at 47.93% in 2012, the margin decreased each year to 47.21% in 2013, 46.75% in 2014, and further to 44.76% in 2015. This downward trend indicates increasing cost pressures or pricing challenges within the residential segment over the four-year span.
- Business Services
- Business Services profit margins exhibit relative stability with slight fluctuations. The margin was 59.02% in 2012, dipped modestly to 58.43% in 2013, increased to 60.57% in 2014, and slightly decreased to 60.51% in 2015. This pattern suggests effective management of profitability, maintaining a consistently higher margin compared to Residential Services despite minor year-to-year variations.
- Other Operations
- The Other Operations segment demonstrates a significant and continuous decline in profit margins over the period. Beginning at 57.95% in 2012, the margin declined sharply to 52.00% in 2013, 44.41% in 2014, and reached 38.89% in 2015. This trend signals deteriorating profitability in this segment, potentially due to increased costs, reduced revenues, or both, warranting further investigation.
Overall, while Business Services maintains a strong and relatively stable profit margin, both Residential Services and Other Operations segments show notable declines, with Other Operations experiencing the most pronounced decrease. These trends may reflect evolving market dynamics or operational challenges in these specific areas.
Segment Profit Margin: Residential Services
Time Warner Cable Inc.; Residential Services; segment profit margin calculation
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| OIBDA | 8,489) | 8,623) | 8,688) | 8,712) | —) |
| Revenue | 18,966) | 18,446) | 18,402) | 18,175) | —) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 44.76% | 46.75% | 47.21% | 47.93% | — |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Segment profit margin = 100 × OIBDA ÷ Revenue
= 100 × 8,489 ÷ 18,966 = 44.76%
The analysis of the "Residential Services" segment over the period from 2012 to 2015 reveals several key trends in financial performance metrics.
- Operating Income Before Depreciation and Amortization (OIBDA)
- The OIBDA figures indicate a slight but consistent decline over the four-year period. Starting at $8,712 million in 2012, the OIBDA decreased to $8,688 million in 2013, followed by a further reduction to $8,623 million in 2014, and reaching $8,489 million by the end of 2015. This trend suggests a gradual erosion in operating profitability excluding depreciation and amortization expenses.
- Revenue
- Revenue for the segment exhibited a moderate growth trend. It increased from $18,175 million in 2012 to $18,402 million in 2013 and continued to rise slightly to $18,446 million in 2014. By 2015, revenue reached $18,966 million, reflecting steady albeit modest growth in top-line performance over the period.
- Segment Profit Margin
- The segment profit margin shows a declining trend throughout the period analyzed. Starting at 47.93% in 2012, the margin decreased to 47.21% in 2013, then further dropped to 46.75% in 2014, and ended at 44.76% in 2015. This decline in margin suggests increasing cost pressures or reduced pricing power impacting profitability relative to revenue.
In summary, while revenue demonstrated steady growth, operating profitability in terms of OIBDA declined slightly, and the segment profit margin decreased year over year. This combination points to potential challenges in cost management or competitive dynamics impacting financial efficiency in the segment.
Segment Profit Margin: Business Services
Time Warner Cable Inc.; Business Services; segment profit margin calculation
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| OIBDA | 1,987) | 1,719) | 1,351) | 1,122) | —) |
| Revenue | 3,284) | 2,838) | 2,312) | 1,901) | —) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 60.51% | 60.57% | 58.43% | 59.02% | — |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Segment profit margin = 100 × OIBDA ÷ Revenue
= 100 × 1,987 ÷ 3,284 = 60.51%
- Revenue
- There is a consistent upward trend in revenue over the observed period from 2012 to 2015. The revenue increased from 1,901 million US dollars in 2012 to 3,284 million US dollars in 2015, indicating strong growth in the business services segment. This represents a compound annual growth rate (CAGR) of approximately 21% over the four-year period.
- OIBDA (Operating Income Before Depreciation and Amortization)
- OIBDA followed a similar positive trajectory, increasing from 1,122 million US dollars in 2012 to 1,987 million US dollars in 2015. This growth reflects an improving operational performance and enhanced earnings capacity in the segment. The steady increase aligns with the revenue growth, suggesting effective cost management or scalability benefits.
- Segment Profit Margin
- The segment profit margin displayed relatively stable performance with slight fluctuations. Starting at 59.02% in 2012, it marginally decreased to 58.43% in 2013 but then rose to 60.57% in 2014 and maintained a similar level at 60.51% in 2015. This trend indicates consistent profitability with a slight improvement in margin efficiency over time, which supports the overall positive financial health of the segment.
- Overall Insights
- The business services segment demonstrated strong growth in both revenue and operating income over the four-year period analyzed. The steady profit margin corroborates that the growth was managed effectively without compromising profitability. These trends suggest that the segment successfully expanded its market presence and maintained operational efficiency.
Segment Profit Margin: Other Operations
Time Warner Cable Inc.; Other Operations; segment profit margin calculation
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| OIBDA | 665) | 787) | 833) | 846) | —) |
| Revenue | 1,710) | 1,772) | 1,602) | 1,460) | —) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 38.89% | 44.41% | 52.00% | 57.95% | — |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Segment profit margin = 100 × OIBDA ÷ Revenue
= 100 × 665 ÷ 1,710 = 38.89%
- Revenue
- The revenue for the segment displayed an increasing trend from 2012 through 2014, starting at $1,460 million in 2012 and peaking at $1,772 million in 2014. However, in 2015, revenue decreased slightly to $1,710 million, indicating a modest decline after years of growth.
- OIBDA
- Operating Income Before Depreciation and Amortization (OIBDA) followed a generally declining trend over the analyzed period. In 2012, OIBDA was $846 million, which slightly decreased in 2013 to $833 million, followed by further reductions in 2014 and 2015, reaching $787 million and $665 million respectively. This decline suggests mounting pressure on operational earnings.
- Segment Profit Margin
- The segment profit margin exhibited a consistent decrease throughout the period. Starting at 57.95% in 2012, the margin fell to 52% in 2013, then declined more sharply to 44.41% in 2014 and finally dropped below 40% to 38.89% in 2015. This trend indicates diminishing profitability relative to revenue within the segment.
- Insights and Observations
- Despite initial revenue growth, the segment's profitability is under pressure as indicated by declining OIBDA and profit margins. The decrease in profit margin suggests rising costs or decreasing operational efficiency. The slight revenue drop in 2015 might signal emerging challenges in maintaining growth. Overall, these patterns point to the need for strategic evaluation to address profitability and sustain growth.
Revenue
Time Warner Cable Inc., revenue by reportable segment
US$ in millions
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Residential Services | 18,966) | 18,446) | 18,402) | 18,175) | —) |
| Business Services | 3,284) | 2,838) | 2,312) | 1,901) | —) |
| Other Operations | 1,710) | 1,772) | 1,602) | 1,460) | —) |
| Intersegment eliminations | (263) | (244) | (196) | (150) | —) |
| Total consolidated | 23,697) | 22,812) | 22,120) | 21,386) | —) |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The analysis of the annual segment revenue data over the periods from 2012 to 2015 reveals several notable trends across the different service categories.
- Residential Services
- The revenue from Residential Services shows a consistent upward trend throughout the observed period. Starting from approximately $18,175 million in 2012, the revenue slightly increased each year, reaching $18,966 million by 2015. Despite the relatively small increments, this steady growth indicates stable performance and possibly successful customer retention or modest expansion in this segment.
- Business Services
- Business Services experienced significant growth over the four-year span. Beginning at $1,901 million in 2012, the revenue rose substantially to $3,284 million in 2015. This sharp increase suggests a strong expansion focus on business clientele, improvements in service offerings, or increased market demand in this segment.
- Other Operations
- Revenue from Other Operations displayed moderate growth initially, increasing from $1,460 million in 2012 to $1,772 million in 2014. However, there was a slight decline in 2015, with revenue falling to $1,710 million. This pattern reflects possible fluctuations in less core or ancillary business areas, which may be subject to variability due to market conditions or internal business decisions.
- Intersegment Eliminations
- The intersegment eliminations, which represent the removal of revenues occurring between reporting segments to avoid double-counting, increased in magnitude annually (more negative), progressing from -$150 million in 2012 to -$263 million in 2015. This growing adjustment indicates an increase in internal transactions among segments over time, reflecting potentially greater integration or cross-segment business activities.
- Total Consolidated Revenue
- Overall, total consolidated revenue demonstrated a steady increase, rising from $21,386 million in 2012 to $23,697 million in 2015. This growth, though moderate, aligns with the upward trends in the major individual segments, especially driven by growth in Business Services and Residential Services.
In summary, the company’s revenue profile shows stability and growth, with pronounced expansion in Business Services, consistent performance in Residential Services, and minor fluctuations in Other Operations. The ascending intersegment eliminations highlight increased internal activities. These trends suggest a strategic emphasis on the business market segment while maintaining a solid residential customer base.
OIBDA
Time Warner Cable Inc., oibda by reportable segment
US$ in millions
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | |
|---|---|---|---|---|---|
| Residential Services | 8,489) | 8,623) | 8,688) | 8,712) | —) |
| Business Services | 1,987) | 1,719) | 1,351) | 1,122) | —) |
| Other Operations | 665) | 787) | 833) | 846) | —) |
| Shared functions | (3,206) | (3,126) | (3,011) | (2,971) | —) |
| Total consolidated | 7,935) | 8,003) | 7,861) | 7,709) | —) |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
- Residential Services
- The Operating Income Before Depreciation and Amortization (OIBDA) for Residential Services shows a slight but consistent decline over the four-year period from 2012 to 2015. Starting at $8,712 million in 2012, the OIBDA decreased gradually each year, reaching $8,489 million in 2015. This suggests a marginal reduction in profitability or operational efficiency within the residential segment during this period.
- Business Services
- The Business Services segment exhibits a clear upward trend in OIBDA, growing significantly from $1,122 million in 2012 to $1,987 million in 2015. This represents substantial expansion and improving profitability, indicating successful growth strategies or increased demand in the business market over the years analyzed.
- Other Operations
- The OIBDA for Other Operations demonstrates a consistent decline from $846 million in 2012 to $665 million in 2015. This decreasing trend may reflect reduced contribution from ancillary operations, possibly due to restructuring, divestitures, or declining performance in non-core areas.
- Shared Functions
- Shared functions show increasing negative OIBDA values each year, growing in absolute terms from -$2,971 million in 2012 to -$3,206 million in 2015. This reflects rising costs or overhead expenses allocated to shared services, indicating an increasing burden on consolidated profitability.
- Total Consolidated
- The total consolidated OIBDA exhibits modest growth from $7,709 million in 2012 to a peak of $8,003 million in 2014, followed by a slight decrease to $7,935 million in 2015. This overall stability suggests that gains in Business Services and other segments were largely offset by declines in Residential Services, Other Operations, and increasing shared functions expenses, resulting in relatively steady consolidated operating performance.