Viacom Inc., owner of cable networks MTV and Nickelodeon, missed fiscal third-quarter profit estimates as rising fees from pay-TV operators and higher advertising sales only partly offset increasing expenses.

Excluding some items, earnings were $1.29 a share, missing the $1.30 analysts predicted on average, according to data compiled by Bloomberg. Domestic advertising sales rose 6 percent, and domestic licensing fees paid by cable and satellite systems gained 28 percent, the New York-based company said today in a statement. The company doubled its stock-buyback plan .

Viacom, which relies on its television business for more than 90 percent of annual operating income, has been hurt by falling ratings at its networks. To make up for the declines, the company has sought more licensing fees paid by the cable and satellite systems that carry the company's channels. Net income increased 20 percent to $643 million, or $1.31 a share, from $534 million, or $1.01, a year earlier. Sales rose 14 percent to $3.69 billion. Analysts estimated $3.57 billion on average.

The company said it boosted its stock-buyback program to $20 billion from $10 billion. Viacom, controlled by billionaire Sumner Redstone, gained 2.2 percent to $74.36 at yesterday's close in New York. The shares have risen 41 percent this year.

Eoin Treacy's view Despite the fact that Viacom did not meet analyst expectations for its earnings, its results are well ahead of last quarter's. The more important question is where growth is likely to come from in future. There is no denying that the company has a great deal of cash and the decision to spend it in buying up approximately half the market cap has rewarded investors .

The share is currently somewhat overbought relative to the 200-day MA and susceptible to some consolidation of recent gains. A sustained move below the trend mean would be required to question medium-term potential for additional upside.

Buying back shares has been quite a fashion for corporations holding large cash reserves and facing an uncertain regulatory and economic environment which has deterred capital expenditure. Some c ompanies that have been popular among investors for buying back shares are finding headline growth increasingly difficult to achieve. IBM and Oracle come to mind. In the meantime, the fact that these types of companies are reducing the supply of shares continues to support prices.

The Powershares Buyback ETF is comprised of US shares that have bought back at least 5% of their shares in the last 12 months. Following an impressive rebound from the late June low, the fund is now really quite overextended relative to the 200-day MA and susceptible to mean reversion. However, a sustained move below the trend mean would be required to question medium-term upside potential. Here is a link to their website which contains more detail on the members.