The Zacks Analyst Blog Highlights: Electronic Arts, Time Warner Cable, Apple, Comcast and Verizon Communication

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Dec 28, 2011, 09:30 ET

CHICAGO, Dec. 28, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Electronic Arts Inc. (Nasdaq: EA), Time Warner Cable Inc. (NYSE: TWC), Apple Inc (Nasdaq: AAPL), Comcast Corp. (Nasdaq: CMCSA) and Verizon Communication Inc. (NYSE: VZ).

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Here are highlights from Tuesday's Analyst Blog:

Massive Response for EA's "Star Wars"

Electronic Arts Inc.'s (Nasdaq: EA) ambitious project, Star Wars: The Old Republic, has caught the imagination of the gamers, as millions of Star Wars' fans logged into the game to celebrate their holidays in Sith lords or Jedi knights' style. Stats revealed by the company suggested that over a million gamers kept themselves busy in the game for 5.5 million game hours over the last weekend.

The online massively multiplayer online (MMO) game, released on December 20, 2011, has already logged 60 million game hours with 850,000 Sith Warriors and over 810,000 Jedi Knights characters being created. The game has already accounted for 3 billion NPC (Non-Player Character) being eliminated while 260 million quests being completed.

The aforesaid data released by the company not only reveal the growing popularity of the game since its release, but also highlights EA's committed effort to make the game a grand success. The company's marketing strategy hardly bothered about the budget restrictions and analysts estimate the company to have spent in the range of $100 million to $300 million in promoting the game. However, the company did not divulge any details of the expenditures.

Analysts opine that the game will have in excess of 2 million subscribers in the initial phase, who will pay $60 for the first month's subscription. Starting from the second month, analysts expect 1.5 million subscribers to opt for the $15 subscription model of EA. This subscription model will expectedly be a regular revenue generator for the company going forward.

Time Warner Cable Enhances Offering

Time Warner Cable Inc. (NYSE: TWC), the second largest cable MSO in the U.S., recently announced the inclusion of 37 Spanish language channels on TWCable TV for Apple Inc's (Nasdaq: AAPL) iPad.

Based on the increasing demand for Spanish networks on tablets, the company extended its Spanish channel portfolio and these channels will be free for Time Warner Cable's customers.

With the growing popularity of tablets and smartphones coupled with the deployment of LTE networks, the customers are shifting their preference of watching their favorite TV shows and games through cable and satellite TV and transitioning to online TV, where they can watch their popular shows whenever they feel.

Another cable giant Comcast Corp. (Nasdaq: CMCSA) is set to create history by offering live streaming of America's most popular sporting event "Super Bowl", scheduled to take place on February 5, 2012, on smartphones and tablets.

So looking at the massive popularity of such services, most cable and satellite TV operators have started offering new software for the tablet and smartphone users. These software need to be downloaded on the customers devices, hence allowing better streaming of particular channels.

Solid free cash flow and healthy demand for premium cable services along with strong share buyback program will likely drive the company's top-line and bottom-line growth. Moreover, the recent deal with Verizon Communication Inc. (NYSE: VZ) where Time Warner Cable and other cable operators can sell each others' plans from their distribution network will reduce the competition as well as boost subscriber growth.

However, huge debt coupled with a rise in programming cost and continuous loss of subscribers will act as headwinds for the company going forward. Moreover, stiff competition from other cable and telecom operators as well as from the newly emerged online video streaming companies will hurt profitability going forward.

We maintain our long-term Neutral recommendation on Time Warner Cable. Currently, Time Warner Cable has a Zacks #3 Rank, implying a short-term Hold rating.

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