I was starting to think that the popular view of the CEO as a supersalesman for CBS was becoming a tired caricature, until I saw what happened to the company’s stock today. Shares were +4% — to a new high (at least since its spin off from Viacom at the end of 2005) of $44.64 — even after the broadcaster last night disclosed Q4 financials that fell short of the Street’s revenue and profit expectations. It certainly helped that CBS also announced a $1B accelerated share repurchase. But if that’s all it took to win over investors then they should be in love with DirecTV, which yesterday announced a $4B share repurchase, and beat Q4 expectations. Yet it’s down about 5.8% since Wednesday as investors focused instead on the shot the company will take from Venezuela’s currency devaluation. It seems that the Street is more forgiving of CBS at least in part because Les Moonves has dazzled investors with his boundless optimism.
You could see that reflected in the uncharacteristically dreamy comments that appeared today in reports from some of Wall Street’s sharpest analysts. Bernstein Research’s Todd Juenger acknowledges that following the “almost giddy tone” in the CBS chief’s conference call with analysts yesterday “it’s strangely difficult to put a finger on exactly what went ‘wrong,’ if anything” in Q4. Wells Fargo’s Marci Ryvicker says that “Q4 was rough, but it doesn’t really matter” because the problems in local ad sales were just temporary. The share repurchase announcement, she adds, “felt like a much-needed box of chocolates during a tiring earnings season.” CBS’ Valentine’s Day sweets could soon become a lot more appealing according to RBC Capital Markets’ David Bank: He says that once CBS sells its international billboard unit, the company’s financial wizards could engage in other transactions that would reduce the number of shares by more than 30%, and push earnings per share to about $4 in 2014 from $2.52 in 2012.
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There’s little doubt that things are going well for CBS. But the company could trip, Nomura Equity Research’s Michael Nathanson warns, with “weak CBS network ratings, ad weakness and/or changes in syndication revenue outlook.” Juenger also warns investors not to become too infatuated with the sales pitch: “A recurring question going forward, after they play each card from their hand, is ‘what can they possibly do next — aren’t they about out of cards?'”
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