Rogers stock drops after analyst's downgrade

Wed Jan 7, 2009 12:47pm EST
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TORONTO (Reuters) - Shares of Rogers Communications Inc fell more than 3 percent on Wednesday after an analyst downgraded the stock following the release of weaker-than-expected cable-TV subscriber results.

David Lambert, an analyst at Canaccord Adams, cut his rating on the shares to "hold" from "buy" and reduced his 12-month target to C$35 from C$38.

His cut came a day after Rogers, Canada's biggest cable-TV supplier, said it added 199,000 wireless phone subscribers in the fourth quarter ended December 31, up from 183,000 a year earlier.

"However, in our view, the real story was not wireless, but weak cable subscribers," Lambert wrote in a note to clients.

"The cable operation added only 17,000 net new high-speed customers and only 1,000 net new telephone subscribers as compared with our 50,000 and 45,000 estimates."

Rogers blamed the results on the weak economy.

The company's shares, which gave up almost 6 percent on Tuesday, fell another C$1.19 to C$33.81 on the Toronto Stock Exchange on Wednesday morning.

Lambert said the weak cable and Internet results may mean that customers will seek ways to trim their bills every month by seeking cheaper alternatives. As well, the share of the Internet customer market held by cable companies such as Rogers is peaking at about 60 percent, he added.

(Reporting by Wojtek Dabrowski; editing by Peter Galloway)

<p>Rogers Communications Inc. head office is seen in Toronto in this April 29, 2008 file photo. REUTERS/Mike Cassese</p>