One-time costs related to its failed bid for Paramount Communications and the startup of two international ventures sent QVC Inc.’s fourth-quarter net profits tumbling 85% to $ 2.8 million.
The 6 cents-per-share profit compares unfavorably with 40 cents in last year’s fourth quarter. Still, continuing operations remained solid, and investors supported QVC stock. Shares closed unchanged at $ 42.50.
The loss for the period ended Jan. 31 included an after-tax charge of $ 18.8 million, or 38 cents per share, related to the shopping network’s tender offer for 50.1% of Paramount, canceled on Feb. 15. The quarter also includes a pretax loss of $ 9.3 million on QVC’s recently launched joint ventures in Mexico and the United Kingdom.
Wall Street was expecting earnings of about 50 cents per share, not including the charges, without which QVC’s profits would have been about 1 cents above expectations, analysts said. “Everyone knew there was going to be a charge, but no one had figured in the amount,” said one industry observer.
Net revenues grew 9% to $ 372.5 million from the year-ago period and operating income gained 34.4% to $ 53.2 million. Shares outstanding added 2.3 million to 49.1 million.
“Though obviously somewhat distracted while pursuing Paramount, we have not been deterred from our strategy to put in place an aggressive plan for growth in both our basic business and the emerging world of interactivity,” chairman Barry Diller said in a statement.
After a five-month pitched battle fought in the courtroom and boardroom, investors spurned QVC’s bid of $ 104 in cash per share for about half of Paramount’s outstanding shares, plus securities for the remainder, in favor of Viacom’s offer of $ 107 per share plus securities.
For the full year, QVC’s net income rose 7.6% to $ 59.3 million although per-share net income dipped almost 5% to $ 1.18, as shares outstanding grew by 4 .8 million to 50.2 million.
Annual revenues advanced 14.2% to $ 1.22 billion and operating income firmed 28.8% to $ 152.2 million. The previous year’s results included a one-time charge of $ 1.5 million, or 3 cents per share, for the write-off of debt-placement fees.
QVC posted a total annual pretax loss of $ 11.4 million for the Mexican and British joint ventures, but several analysts said the costs were relatively modest considering the huge potential international market.