Viacom Earnings Cheat Sheet:

by: Wall St. Cheat Sheet

One of the largest media conglomerates in the world with a market cap of almost $24B, Viacom (VIA.B) reported a beat on earnings Thursday (see earnings call transcript), but recast its financials according to its plan to sell Harmonix, developer of the popular “Rock Band” game franchise. The stock rose about 4 percent following the news.

A spin-off from CBS Corporation in 2005, the company includes TV networks such as MTV, Comedy Central, Nickelodeon and BET, as well as Paramount Pictures and other production assets. Although based primarily in the US, the company also has operations in India and Canada.

Viacom lost its suit against Google (NASDAQ:GOOG) and YouTube for broadcasting licensed content and now offers free online access to its material through Joost. The company recently signed on with Microsoft to offer Viacom-owned assets through Xbox, MSN, and Windows and also partnered with TBS. Philippe Dauman took over as President and CEO in 2006.

Here is your earnings cheat sheet (net of “discontinued operations, including Harmonix) for VIA.B:

Earnings: Up 6 percent (yoy) to $0.75 from $0.71, up 20 percent on a 9-month basis

Revenues: Up 5 percent (yoy) to $3.33B from $3.17B, up 1 percent on a 9-month basis

Actual vs. Expected: $.06 higher than expectations at $0.69 per share; $0.69 per share in the year-ago period

Notable Stats: EPS growth driven by advertising (up 8 percent domestically, the third consecutive quarter of sequential improvement), affiliate and television license fees (up 10 percent); growth in revenue driven by Media Networks and Filmed Entertainment, although fewer filmed entertainment releases had a negative impact on earnings

Core Product Updates: Growth in eps driven by advertising, affiliate and television license fees

Key Quotes: Viacom positioned itself for brighter days ahead with this quote from Philippe Dauman, President and Chief Executive Officer:

“We are very pleased with the financial and operational results we delivered in fiscal 2010, which were the direct result of our continuing creative success. With a strong balance sheet and increasing free cash flow, we are delivering on our commitment to return capital to our shareholders with the institution of a quarterly cash dividend in the second quarter followed by the resumption of our stock repurchase program in October…

Our motion picture business continues on its trajectory of controlling overhead expenses as it pursues a film strategy focused on franchises and brands. The studio is off to a great start in fiscal 2011 with the box office success of Jackass 3D and Paranormal Activity 2.”

Competitors: The Walt Disney Company (NYSE:DIS), Time Warner (NYSE:TWX), and News Corporation (NASDAQ:NWSA)

Technicals: The chart looks a bit messy as MACD shows a divergence to the downside while stochastic is moving to oversold. With volume tapering off and the stock trading at its 52-week high today, the strong upward momentum born in early September could falter. The long-term trajectory, however, for Viacom looks good as it streamlines its operations and expands into new markets. The stock could be shaping up as a good buy on short-term weakness in the stock price.

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Disclosure: No positions