Liberty Stocks Down on Q3 Results

Liberty Media tracking stocks take hit on declining sales at QVC shopping channel, withdrawn earnings guidance
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Liberty Media stocks took a hit Thursday after the company reported third quarter earnings showing a drop in revenue for its QVC shopping channel, and said it would not longer provide earnings guidance “for the foreseeable future.”

Liberty Interactive—which includes QVC—fell 23% ($1.48 per share) to $4.90 each on Thursday after the company released third quarter earnings. Liberty Entertainment dipped nearly 8% ($1.38 each) to $15.94 per share.

QVC, the principal operating segment of Liberty Interactive, saw its domestic revenue fall 9% in the third quarter, primarily due customers buying fewer and lower-margin items. QVC CEO Michael George said customers are spending less but are not actually leaving QVC, which may suggest that QVC will see revenue rebound along with the economy.

In a statement, Liberty president/CEO Greg Maffei admitted that the economic downturn had taken a toll on the company: "Although several of our businesses, including Starz and our e-commerce companies, produced solid results, Liberty has not been immune to the volatile economic climate," said Maffei. "In light of the financial market turmoil, we continued our focus on balance sheet management.”

Because of the unpredictable economic climate, Liberty has chosen to withdraw guidance provided in 2006 regarding Liberty Interactive, and “will not be providing new guidance for the foreseeable future.”

Liberty is represented by three separate voting stocks, Liberty Interactive, Liberty Entertainment, and Liberty Capital. 

The QVC domestic fall balanced out with an increase in international revenue for QVC and positive third quarter results for Liberty Interactive group’s ecommerce business, including Provide Commerce, Backcountry.com, Bodybuilding.com and Buyseasons for an overall revenue increase of 2%. Liberty Interactive’s stock fell 23% or $1.48 per share to $4.90 on Thursday.

Liberty Entertainment, which includes Starz Entertainment and Liberty’s stake in DirecTV, saw a 21% rise in revenue, while over $900 million in cash and exchangeable debts were transferred from Liberty Entertainment to Liberty Interactive to solidify its credit position after QVC exhausted its bank credit lines.

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