The Eye Web gave a big wink to Wall Street Wednesday, reporting significantly improved second-quarter operating results. The investment community embraced the news, pushing the stock of CBS up $ 8.75 per share to $ 245, just $ 5 shy of its 52-week high of $ 250 per share.Net income at the pure-play broadcaster grew 56% to $ 107.4 million, or a record $ 6.73 per share, from $ 69 million ($ 4.46) in the year-earlier period. While almost 40 cents per share of the earnings gain related to a one-time benefit from an insurance settlement, financial sources still expressed amazement over the results. “They surprised everybody again; the numbers were better than expected,” said analyst Jessica Reif, who noted that her earnings-per-share estimate of $ 6.25 for the quarter was among the highest on Wall Street. In a release, CBS topper Laurence Tisch credited the network for the gains: “Despite a slow growth economy, the network registered a sales increase of 8%, reflecting the popularity of its primetime and daytime programming among both viewers and advertisers.” He added that the company’s earnings increase was aided by its ongoing cost containment efforts. While the company does not break out segment operating numbers, Reif estimated that network operating profit was close to $ 90 million, up almost 270 % from $ 33.5 million last year. “It clearly demonstrates the leverage in the network television business,” she said. “A little bit of revenue increase has a very significant impact on the bottom line.” CBS said the network benefited from better unit pricing in primetime, daytime , late night and news dayparts. Network sales were also bolstered by strong ratings for the NCAA Men’s Basketball Tournament, whose semifinal and championship games were aired by CBS Sports during the second quarter. CBS said profits rose at its stations division, aided by lower operating costs. Additionally, the stations recorded pre-tax income of $ 10.7 million related to insurance settlements for hurricane damage to its television station in Miami. Although local radio advertising remained weak, the company said CBS Radio’s profits increased in the second quarter, primarily as a result of the company’s cost control program. Company-wide consolidated net sales totaled $ 835.8 million in the second quarter, up 7% over the year-earlier period. Operating expenses fell 2%. Operating income before interest and taxes was $ 153.1 million, compared with $ 83.7 million last year. Net interest income in the quarter increased to $ 22 million (including a $ 14.2 million gain from the sale of marketable securities) from $ 8.6 million in the prior period. At quarter’s end, cash and marketable securities exceeded $ 1.2 billion, while total debt was about $ 500 million. Separately, CBS declared its regular 25 cents quarterly dividend payable Sept. 13 to shareholders of record Aug. 25. Looking forward, Tisch said that in the network television scatter market, unit pricing for CBS in the third quarter remains well ahead of last year, even though advertisers remain concerned about the economy and are cautious in making commitments for ad time. Added Tisch: “With current year-to-date earnings of $ 10.23 per share, CBS is positioned to exceed by a significant margin its full-year record earnings of $ 11.54 per share from continuing operations, which was set in 1989.” Reif, who currently has a buy recommendation on the stock, raised her earnings per share estimate for the full year 1993 to $ 17.50 from $ 17.25. Reif said she would not revise her 1994 estimates until the advertising outlook becomes clearer.
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