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TCI down on earnings report

The company's shares fall nearly 2 percent after it posted a decline in second-quarter earnings.

    Tele-Communications Incorporated shares fell nearly 2 percent today after the company announced a decline in second-quarter earnings.

    The stock lost 1.8125, or nearly 5 percent, to 36.4375 in today's trading. TCI's shares have traded as high as 44 and as low as 17.31 during the past 52 weeks.

    The company reported revenues of $1.5 billion for the second quarter ended June 30, a decline of 6.4 percent compared with revenues of $1.6 billion reported for the year-ago quarter.

    The cable giant, which is merging with AT&T in $48 billion deal, reported a net loss of $142 million, compared with a loss of $160 million posted for the year-ago quarter.

    The company generated $627 million in operating cash flow, a decline of 5.4 percent compared with the operating cash flow of $663 million reported for the year-ago quarter.

    One analyst said that decline belies the success the company has had in executing its business strategy. "Who knows what happens below the line, but the company is very complex and intricate and has a lot of different partnerships and minority interests," he said. "But their cash flow was basically in line with what we expected."

    Unlike other industries, analysts said, the cable industry looks at cash flow rather than earnings per share to gauge the health of a company.

    "The numbers were not surprising in my opinion because this is a company that is positioning itself very well for the future," said Theodore Henderson, an analyst at Janco Partners. "They are focusing on rebuilding or launching new services that are capital-intensive. They are not necessarily in a period where I am expecting to see great rises in operating cash flow."

    Henderson noted that TCI is improving its position through the AT&T merger because of the deal's "forward-focusing opportunities" in the Internet, high-speed data services, and telephony spaces.

    "There are only two pipes that pass the home, and cable has a lot more capacity." Henderson said. "Deploying these digital services is going to generate more money-making opportunities."

    Shares of AT&T, however, fell more than 3 percent on TCI's earnings news.