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May-01-2008Comcast profit falls, but broadband totals surprise(topic overview)
CONTENTS:
- Comcast released their first quarter earnings this morning, which show the cable giant saw a 12.5% drop in first-quarter net profit and a loss of 57,000 basic video subscribers. (More...)
- Looking at the bottom line, net earnings fell 13% to $732 million, or 24 cents per share, from $837 million (26 cents) a year ago, when including one-time gains a year ago that skewed comparisons. (More...)
- Wall Street expected Comcast to post revenue of $8.17 billion and per-share profit of 19 cents excluding items, according to Reuters Estimates. (More...)
- Comcast faced tougher competition on the broadband front, where the average customer pays $42.18, a drop from last year's $43.08. (More...)
- WHAT'S AHEAD: Comcast and other cable companies are reported to be in talks with telecom and Internet companies to create a WiMax wireless network that would link computers, televisions and cell phones. (More...)
- I tried a HD DVR and that was DOA and thats when i jumped to dish. (More...)
- Analysts in a Thomson Financial survey estimated a profit of 22 cents a share. (More...)
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Comcast released their first quarter earnings this morning, which show the cable giant saw a 12.5% drop in first-quarter net profit and a loss of 57,000 basic video subscribers. While analysts might be quick to suggest FiOS is to blame, the profit decline is thanks to a $300 million one-time gain the company posted last year at this time as they dissolved a partnership with Time Warner Cable (and gained Houston markets). [1] About two-thirds of Internet subscriber growth came from telephone customers, Chief Operating Officer Stephen Burke said on a conference call with investors. Excluding one-time items in both periods, profit rose 9.5 percent to $588 million, or 19 cents a share, matching the average of 17 analysts' estimates compiled by Bloomberg. Last year, the company recorded a $300 million gain from the dissolution of its Texas/Kansas City cable partnership. Comcast reiterated its 2008 outlook, projecting revenue growth of 8 percent to 10 percent.[2] The addition of 492,000 high-speed Internet subscribers compares with 586,000 added in the first quarter of 2007. "They put up some very strong subscriber metrics,'' JPMorgan Chase & Co. analyst Jonathan Chaplin said in an interview today. He is neutral on whether clients should buy Comcast stock and doesn't own any shares. Average revenue per Internet customer dropped about 2 percent, indicating Comcast subscribers are choosing lower-cost, lower-speed tiers of Internet access as they switch from slower telephone company products, said Chaplin. The company also repurchased $1 billion of its shares in the quarter, double the year-earlier total, and said in February it will buy back $6.9 billion worth over two years.[2] Cable-TV-segment revenue climbed by 5% to $4.71 billion. Average monthly customer bills for Internet access and voice both dipped slightly, amid price cutting. Both voice and broadband Internet access grew their subscriber bases, and company brass said broadband is a higher-profit service than cable-TV video. Comcast counted 14.1 million high-speed Internet-access customers at the end of the quarter, up from 12.4 million one year ago, taking digital-subscriber-line customers from telcos that are dissatisfied with DSL's slower speeds. This more than offset the sting of the slight decline in cable-TV subscribers. Stock analysts, which were upbeat on Comcast's earnings generally, found its broadband gains particularly encouraging. Its smaller programming segment -- which includes E! Entertainment Television, The Golf Channel, Versus and G4 -- posted robust results, continuing a sector trend of sparkling gains for basic-cable networks.[3]
During the quarter, the company added 494,000 new subscribers to the digital cable services, 492,000 new subscribers to the high-speed Internet services, and 639,000 new subscribers to the Comcast Digital Voice services. The programming segment, which comprises of the national programming networks such as E! Entertainment Television and Style Network (E! Networks), The Golf Channel, VERSUS, and G4, reported a 20% rise in revenue during the first quarter at $363 million compared to $322 million in the year-ago quarter.[4] The increase in first quarter revenue reflected price increases for video services as well as growth for Comcast's high-speed Internet, digital voice and digital cable with advanced services. That was offset by "modestly" lower average revenue per unit on several products because of an increase in customers receiving service as part of a promotional offer or in a new product package, the company said.[5] In the cable segment, pro forma revenue for the quarter increased 10% to $7.9 billion from $7.2 billion in the corresponding quarter last year. Solid growth in Comcast High-Speed Internet, Comcast Digital voice and Comcast Digital cable, coupled with moderate price increases in video services were attributed as primary reasons for the 10% growth achieved in this segment.[4]
Time Warner Cable, which along with Comcast acquired some cable systems from Adelphia Communications in 2006, added basic cable, high-speed Internet and telephone subscribers. It faced the challenges of a high-definition TV service marketing push from satellite leader DirecTV as well as growth from fiber-optic operators such as Verizon'''s FiOS and AT&T;'''s U-verse. Verizon said this week that its FiOS subscriber base tripled over the past year to about 1.2 million. DirecTV and No. 2 satellite operator Dish Network will report first-quarter earnings later this month.[6] '''We'''re very encouraged by the consumer response.''' Time Warner Inc., which spun off Time Warner Cable in a January 2007 initial public offering but still owns about 84% of TWC, said in a statement today that it will '''soon''' have an agreement to sell its stake in the cable company. Comcast, which had about 24 million subscribers at the end of last year, will report its first-quarter earnings Thursday.[6]
Arris Group's first-quarter revenues were hurt by a drop in orders from Comcast, but the cable-technology supplier said it saw record sales to Time Warner Cable and Charter Communications for the period and said it expects Comcast's business to rebound in the year ahead. First quarter 2008 revenues were $273.5 million, up 16% compared with the year prior period primarily reflecting the acquisition of C-COR. Arris completed its acquisition of C-COR, a vendor of video-on-demand and operations support systems, on Dec. 14.[7] Bewkes said negotiations with Time Warner Cable should be finalized soon. Time Warner Cable reported on Wednesday net income of US$242 million, or $0.25 per basic and diluted common share, for its first quarter of 2008.[8] The Philadelphia, Pennsylvania-headquartered company reported net income for the quarter of $732 million, or $0.24 per diluted share, 13% lower than net income of $837 million, or $0.26 per diluted share, reported for the same period last year. Net income for the latest quarter included a gain of $144 million, or $0.05 per diluted share, related to the dissolution of the Insight Midwest Partnership, while net income for the prior year quarter included a gain of $300 million, or $0.09 per diluted share, related to the dissolution of the Texas/Kansas City Cable partnership, net of taxes in both periods.[4] Comcast said net income totaled $732 million, or $0.24 per share. This compared to $837 million, or $0.26 per share, in the same period last year. Net income in both years include gains from the dissolution of cable partnerships. Excluding these one-time gains in both periods, adjusted net income rose to $588 million, or $0.19 per share.[9]
Excluding one-time gains from dissolution of cable partnerships, Comcast said quarterly profits were $588 million, or 19 cents per share, compared with $537 million, or 17 cents, last year. That matched the average expectation of analysts surveyed by Thomson Financial.[10] Profit rose to $588 million, or 19 cents a share from $537 million, or 17 cents a share, after excluding a one-time gain related to the unwinding of a cable partnership in the first quarter of 2007 in Texas and Kansas, and a partnership with Insight Communications in 2008, Comcast said.[11]
Net income was $732 million, or 24 cents, compared with $837 million, or 26 cents a share, a year ago. The company had a one-time gain of $300 million in the first quarter of 2007 and a gain of $144 million in this year's period.[12] Net income in the first quarter of 2008 was down 12.5%, to $732 million ($0.24 per share), compared with $837 million ($0.26 per share) in the prior year.[5] Philadelphia-based Comcast posted net income of $732 million, or 24 cents per share, compared with $837 million, or 26 cents per share, in the quarter a year ago.[13] The nation's largest cable operator posted net income of $732 million, or 24 cents per share, compared with $837 million, or 26 cents, in the quarter a year ago.[10]
Excluding one-time items, Comcast reported a 10% rise in net income to $588 million and 19 cents per share for the quarter ended March 31, in line with analysts' forecasts, versus $537 million (17 cents) a year earlier.[3] Excluding the one-time gains, adjusted net income for the quarter increased 10% to $588 million, or $0.19 per diluted share, from $537 million, or $0.17 per diluted share, reported in the same period last year.[4]
For the same quarter a year prior, net income was $276 million, or $0.28 per basic and diluted common share.[8]
Time Warner Cable'''s net income fell 12% to $242 million, or 25 cents a share, from $276 million, or 28 cents, a year earlier, as general and administrative costs and depreciation expenses rose as a percentage of sales, the company said.[6] Advertising is increasingly targeted geographically and to specific competitors in geographic areas. In the quarter, the Philadelphia-based company bought back nearly 2% of its shares at a cost of $1 billion. It also began paying cash dividends to shareholders, with a $185 million dividend issued April 30. Comcast had 3.017 billion common shares outstanding at the end of the quarter, giving it a $64 billion stock-market capitalization based on its share price at Wednesday's close. Comcast reaffirmed its guidance for the year, so economic woes are not crimping its outlook at this time. That guidance is for an 8%-10% increase in operating cash flow and consolidated revenue for 2008 and at least a 20% rise in consolidated free cash flow, in part as capital expenditures decline.[3] Comcast ( News - Alert ) reported revenue growth of 14 percent, operating cash flow growth of 15 percent and operating income growth of 23 percent in its first quarter, partly the result of the acquisition of 765,000 basic video customers through system acquisitions in 2007. On a pro forma basis (accounting for the acquisitions as though they had occurred on Jan. 1, 2007), revenue grew 10 percent. Comcast is beginning to resemble the telcos in one respect: it is starting to see weakness or losses in its legacy video business as competitors take share.[14] Capital expenditures fell 2 percent, producing the free cash flow. Comcast vowed earlier this year to aggressively market its services to halt market share erosion. It's now offering an "economy tier" high-speed Internet service priced at $24.95 a month and a "double play" service package. The company also has said it will improve its customer service, a weak spot that competitors are attempting to exploit through TV and print advertisements. As Verizon Communications Inc. and AT&T; Inc. chew away at Comcast's video customer base, Comcast is taking land-line phone customers away from them and other phone companies.[12] Revenue rose as people spent more on cable television, which helped offset lower spending on the Philadelphia-based company's phone and Internet services. Operating income was up 23 percent to $1.55 billion while free cash flow — an important indicator for typically debt-laden industries such as cable — soared by 59 percent to $702 million.[10] Revenue from Web access rose 12 percent to $1.75 billion, while digital-phone-service sales doubled to $573 million. Cable companies are relying on telephone and Internet services for growth as the video market matures and AT&T; Inc. and Verizon Communications Inc. expand their TV offerings.[2]
For Internet service, where Comcast faces more competition, customers spent an average of $42.18, down from $43.08. Revenue for this business rose by 12 percent to $1.75 billion.[13]
Comcast Corp., the nation's largest cable company, slowed its loss of video customers in the first quarter as revenue rose 14 percent and profits fell on the impact of special items.[12] Comcast grew faster in the high-speed access segment, adding 492,000 Internet access subscribers during the first quarter, to reach 28 percent penetration of that service. Comcast also added 639,000 voice customers during the first quarter to reach 12 percent penetration of its basic video customer base.[14] Comcast added 494,000 digital cable subscribers during the first quarter. About 65 percent of its customers now have digital service. That compares to 55 percent for the same quarter in 2007.[14]
The company added 639,000 digital telephone customers after signing 587,000 new accounts a year earlier. It was the only category in which Comcast signed up more subscribers than in the first quarter of 2007.[2]
The company added 492,000 new high-speed Internet customers, down 16 percent year-over-year. Its digital voice service added 639,000 new customers, up 9 percent from last year. Its circuit-switched phone business, which Comcast is exiting, lost 110,000 customers.[10] For each video customer it loses, Comcast says it gains 12 phone customers. Comcast noted that 68 percent of its new high-speed Internet customers converted from phone company DSL services.[12]
Comcast, the nation's largest cable-TV company, posted a 12.5% decline in first-quarter net income as a year-ago transaction hurt comparisons. The spotlight, though, was on subscriber gains Comcast made for its high-speed Internet and digital telephone services.[15] Eight analysts polled by Reuters had expected Comcast to lose around 73,000 basic subscribers. It added 494,000 digital video subscribers and 492,000 high-speed Internet subscribers. It also added 639,000 digital phone subscribers though it was an overall net addition of 529,000 phone subscribers.[11]
The cableco lost 57,000 basic video customers less than the 73,000 analysts polled by Reuters had projected to telco and satellite competitors. That's compared to the addition of 83,000 basic video users a year ago. Comcast added 494,000 digital cable users; 16 million of its customers now have digital service, the company said.[16] Comcast keeps losing basic video subscribers. They continue to upsell the remaining subscribers on digital video, high speed internet, & phone access. The continual loss of basic video subscribers is a trend that will eventually cost them down the road as they have fewer and fewer cable connected customers.[1] NEW YORK (Reuters) - Comcast Corp (CMCSA.O: Quote, Profile, Research ), the largest U.S. cable operator, on Thursday posted a fall in first-quarter net profit and a drop in basic video subscribers as it faced fierce competition from phone and satellite companies.[11]
While overall revenue grew, Comcast's video business continued to erode in the first three months of 2008, with the No. 1 cable multisystem operator reporting a decline in basic video subscribers of 57,000, or 0.2%, for the period.[5]
In a conference call with investors, Comcast said average revenue per basic subscriber hit $107 per month in the quarter, up from $96 one year earlier and $87 two years ago, indicating the impact of customers buying multiple services.[3] Revenue from the phone services registered a growth of 65% to $587 million in the first quarter from $356 million a year ago, while revenue from advertising grew modestly by 6% to $344 million from $322 million last year.[4] Video revenue increased five percent to $4.7 billion in the first quarter while high-speed access revenue increased 12 percent to $1.8 billion and phone revenue increased 65 percent to $587 million.[14]
Revenue increased 14% in the first quarter, to $8.4 billion, while operating cash flow increased 15%, to $3.2 billion, and operating income increased 23%, to $1.6 billion.[5] The company noted that it still has $5.9 billion authorized for repurchase of shares, and plans to complete the share repurchases fully utilizing the authorized amount before the end of 2009. The company has reaffirmed its previously announced guidance for full year 2008. The company expects to report growth in the range of 8% to 10%, both in consolidated revenues and operating cash flow, for 2008.[4] Capital expenditure, expressed as a percentage of revenue, is likely to decline to 18% during full year 2008, while consolidated free cash flow growth is expected to grow 20% from the level of $2.3 billion reported at the end of fiscal 2007.[4]
Revenue from the corporate and other segment for the quarter registered a 25% growth to $110 million from $88 million reported in the prior year quarter, primarily due to strong performance at Comcast Interactive Media from internet advertising and search revenue, as well as inclusion of Fandango.[4] Consolidated revenue for the quarter registered a 14% growth led by strong operating results at Comcast cable and programming segments and favorably impacted by cable acquisitions. The company has also reaffirmed its full year earnings outlook.[4]
Comcast Corp. on Thursday, May 1, 2008, reported a 12.5 percent decline in first-quarter profits from a year ago, when the company's earnings were inflated by a $300 million one-time gain.[13] May 1 (Bloomberg) -- Comcast Corp., the largest U.S. cable- television company, reported a 13 percent drop in profit from a year earlier, when results were bolstered by a one-time gain.[2]
The nation's largest cable operator posted a 12.5 percent decline in profits, but it was mainly due to one-time gains from the dissolution of cable partnerships. Excluding those gains, earnings actually rose by 9.5 percent. Comcast also confirmed its financial outlook for 2008 despite economic headwinds.[13]
Last year, Comcast posted a $300 million gain from the dissolution of a cable partnership with Time Warner Cable Inc., in which Comcast received cable systems in Houston.[13] Time Warner Cable said that figure included an $81 million sale of an equity interest in another company, so the latest results are actually better. Time Warner Cable is the second-largest provider in the U.S. At the end last month, the company counted 14.7 million subscribers for its video, high-speed data and voice services.[8] Time Warner Cable'''s first-quarter earnings, announced today, fell less than analysts expected. The No. 2 U.S. cable television service maintained its subscriber base amid increased competition from satellite and fiber-optic TV providers by bundling its cable, Internet and telephone services. Majority owner Time Warner Inc. said today it would sell its share of the cable company '''soon.'''[6] Time Warner Cable also said today that 2008 revenue will increase about 9% to about $17.4 billion while earnings will be $1.25 to $1.30 a share.[6] Time Warner has announced that it is to spin off its cable TV business. The announcement was made as the company published its quarterly results and admitted that its net profit has fallen 36% to $771m (£390m). This indicates a continuing slide as Time Warner shares have fallen by a third since the start of 2007. The company, which is claimed to be the world's biggest media company, has now opted to spin off its cable television business in a bid to claw back some cash.[17] There was no news, however, about AOL, which is Time Warner's online unit, and which reported a net profit decrease of 36%. There had been rumours of a tie-up with Yahoo - a possible alternative to Microsoft's bid for the web company, but all has gone quiet on this front in recent weeks.[17]
Specifically, "our sales to Time Warner and Charter were outstanding in the quarter," notably on cable modem termination systems, on-demand and operations support systems. All told, the company shipped about 1.64 million cable modems and embedded multimedia terminal adapters (eMTAs) in the period--with more than 30% of those to international customers--compared with about 1.7 million in the fourth quarter of 2007. Stanzione said, "we expect much of this business from Comcast to rebound. especially as our DOCSIS 3.0 products are released in their network."[7] Time Warner Cable is the second largest U.S. operator behind Comcast. It became a separately traded company last year, but Time Warner kept an 84% stake.[17]
One area Comcast continued to dominate was VoIP; the nation's largest VoIP outfit adding 639,000 new customers, up 9% from last year. According to Comcast's numbers, users spent $63.46 on average for cable TV, a jump up from $59.97 this time last year -- resulting in a 5% jump in Cable TV revenue to $4.71 billion.[1] Revenue at the nation's largest cable-system operator climbed a healthy 14% to $8.39 billion surpassing the $8.17 billion forecast of analysts. While rivals such as telephone companies poached cable subscribers, monthly subscriber bills escalated from new and expanded services such as customers adding digital-video recorders, which offset headcount losses.[3] Seventeen Wall Street analysts' consensus revenue estimate came in at $8.17 billion. The company said its basic cable subscribers dropped 57,000, or 0.2%, during the quarter.[9] Analysts expected the cable operator to report revenue of $8.15 billion for the quarter.[4]
Time Warner Cable'''s first-quarter revenue rose 8% to $4.16 billion, beating the average analyst estimate of $4.14 billion. '''We believe these positive trends support our thesis that the acquired systems are poised for a turnaround in 2008,''' Bear Stearns analyst Spencer Wang said in a note to clients today.[6] As with Time Warner ( News - Alert ) Cable, video remains the single most important revenue category, high-speed access is a clear number two and phone services are the fastest-growing category.[14] The two companies compete for customers who want to bundle the services of phone, high-speed Internet and TV. Verizon offers DirectTV satellite service as part of its combined package of services. Gierczynski said he wasn't sure what effect, if any, the Time Warner Cable move will have on the cable company's customers. "It seems like what's going on with the company itself, rather than the services they're offering," he said.[18]
Time Warner Cable is already run as an independent company, so subscribers shouldn't see a change when the bulk of the shares in the company are sold, said Alex Dudley, vice president of public relations for the cable company. "While there is no deal in place and we can't say much until there is, it is unlikely there would be an impact on customers in Erie, Pennsylvania," he said.[18] "Sixteen percent of our shares are already owned by folks other than Time Warner. The rest would be owned by folks other than Time Warner," he said. The deal also is unlikely to affect the daily jobs of the company's employees, he said.[18]
Time Warner's cable division became a separately traded public company about a year ago, but the media giant held on to an 84 percent stake.[18] Time Warner plans sell its stake in its cable division, the company said Wednesday during its quarterly earnings call. "We've decided that a complete structural separation of Time Warner Cable, under the right circumstances, is in the best interests of both companies' shareholders," Time Warner CEO Jeff Bewkes said in a statement.[8] Wall Street had widely anticipated the split. Time Warner didn't offer details on how or when the split with its largest operating division would occur, but said it was near an agreement with the board of Time Warner Cable and expected to make an announcement soon. Lee Gierczynski, a Pittsburgh-based spokesman for Time Warner Cable competitor Verizon Communications, said the Time Warner Cable spinoff shouldn't have a bearing on his company's operations. Verizon will continue to promote itself and operate as it has in the market, he said.[18]
Time Warner Cable'''s 14.7 million subscribers, located primarily in New York, Texas, California and the Carolinas, were about even with a year earlier.[6] Time Warner Cable shares, which had fallen 24% in the past year before today, rose about 2%.[6] As was the pattern with Time Warner Cable yesterday, cable broadband continues to gain share, and at an accelerating pace."[5]
Looking at the bottom line, net earnings fell 13% to $732 million, or 24 cents per share, from $837 million (26 cents) a year ago, when including one-time gains a year ago that skewed comparisons. [3] First-quarter net income fell to $732 million, or 24 cents a share, from $837 million, or 26 cents, a year earlier, Philadelphia-based Comcast said today in a statement.[2]
Arris projects revenues in the second quarter will be in the range of $288 million to $303 million with net income per diluted share in the range of $0.04 to $0.08.[7]
In last year's first quarter, the company earned $537 million, or $0.17 per share.[9] On average, twenty analysts polled by First Call / Thomson Financial expected the company to report earnings of $0.19 per share for the first quarter of fiscal 2008.[4]
Roberts added, "We are confident that our outlook for 2008 is achievable and we are on track to deliver on our goal of consistent and profitable growth that builds long term shareholder value." He also noted that Comcast invested $1 billion to repurchase almost 2% of the company's outstanding shares in the first quarter of 2008, and on April 30 made its first payment on the recently announced quarterly dividend to shareholders.[5] Comcast stated that during the first quarter, it had repurchased 53.1 million shares, representing 2% of the total stock, for $1 billion.[4]
Comcast netted $732 million in income during the first quarter of 2008, down from $837 million during the year-ago period.[16] The company also said that free cash flow, an important financial measure for the company, jumped almost 60 percent to $702 million in the first quarter from $442 million in the prior-year period.[12] Free cash flow rose 59 percent to $702 million, as the company reduced capital spending to $1.43 billion from $1.45 billion a year ago. "It seemed there was a meaningful shift in management's approach,'' Chaplin said an interview before earnings were released.[2] Analysts were expecting $8.17 billion. Operating income was up 23 percent to $1.55 billion while free cash flow — an important indicator for typically debt-laden industries such as cable — soared by 59 percent to $702 million.[13] The company said the increase was due primarily to growth in consolidated operating cash flow along with "relatively unchanged" cable capital expenditures of $1.4 billion.[5]
"We delivered healthy growth in revenues, operating cash flow, free cash flow, adjusted EPS and strong unit additions," Comcast CEO Brian Roberts said in a prepared statement.[5] The firm's 2008 guidance calls for 8%-10% growth in consolidated revenue and operating cash flow.[9]
Programming operating cash flow soared 76% to $113 million and revenue climbed 20% to $363 million.[3] Looking ahead, Comcast expects an 8 percent to 10 percent increase in revenue and operating cash flow.[13]
Again the real growth was VoIP; the average customer paying $40.24, down from $42.44, with Comcast VoIP revenue doubling to $573 million. The results generally indicate the status quo: Comcast continues to see some video losses to FiOS, but they're more than compensating with strong VoIP growth as users ditch their landlines.[1] Revenue, however, more than doubled to $573 million as the company siphoned customers from phone companies.[13]
The company ended the first quarter with $293.0 million of cash and equivalents, compared with $391.8 million at the end of the fourth quarter 2007.[7] In the first quarter, sales to all other customers from the combined Arris and C-COR were up sequentially by about 11%, or $24 million, Stanzione said.[7] In the first quarter, Comcast customers averaged $63.46 per month for cable TV, up 5.8% from $59.97 in 2007's first quarter.[3] Customers spent an average of $63.46 for cable TV, up from $59.97 in 2007's first quarter.[13]
Cable operators continue to lose basic-TV customers -- Comcast lost 57,000 in the first quarter.[15] NEW YORK (Associated Press) - Comcast Corp., the nation's largest cable operator, reports earnings for the first quarter on Thursday.[19] The company added nearly as many broadband users in the first quarter 492,000, all told. Sixty-eight percent of those new subscribers converted from DSL, Comcast reported.[16] The slowing economy seems to have exerted a drag on signing new customers: Comcast added 1.46 million lines of service in the quarter, down 20 percent from a year ago.[10] The slowing economy did affect sign-ups: Comcast added 1.46 million lines of video, phone and Internet services in the quarter, down 20 percent from a year ago.[13]
OVERVIEW: Comcast and other cable companies remain pressured by the slowing economy and increasing competition from phone and satellite TV companies. During the quarter, Comcast came under fire from one of its largest shareholders, Chieftain Capital Management Inc., which demanded a new chief executive and better shareholder returns.[19]
Comcast had a $144 million gain in the quarter after it split a joint venture cable partnership with Insight Communications Co. Comcast received cable systems in Illinois and Indiana.[13] Comcast's business with Arris was down about $62 million in the quarter, particularly with respect to voice modems, Arris chairman and CEO Bob Stanzione said on a conference call Tuesday with analysts.[7]
The nation's largest cable operator also is gaining traction in the business services sector. On the whole, Brian Roberts, chairman and CEO of Comcast, told analysts on Thursday he was "pleased" with his company's results and said the year is "off to a good start."[16] "Investors had started to question how resilient the Comcast business would be in the face of macroeconomic weakness," said Craig Moffett, senior analyst at Sanford Bernstein. "I think the first-quarter results put most of those concerns to rest." Comcast was able to deliver because of its diversified business, Moffett said. As consumers pinch pennies, for example, they might pull back on pay-per-view purchases but sign up for digital phone service with unlimited domestic calls at a set price.[13]
CC analog service has no interactive menus, no surround sound. no nothing with bad ingress interference. at least where I live. As for CC digital services, there not remotely competitive with my dish service IMO. It seems to me that CC is generally pretty busy hooking up customers to their great promos and then loosing many of those same customers when their prices nearly doubles when the promos end. It must cost them a small fortune with all those vans constantly hooking up and disconnecting customers. I think as this economy gets weaker that CC customers will look for alternatives when they keep being hit 1-2 times a year with the comcast hikes. I know many will defend CC services and say they are competitive.[1]
Comcast rose $1.03, or 5 percent, to $21.58 at 10:09 a.m. New York time in Nasdaq Stock Market trading, the most since February. The stock had climbed 13 percent this year before today.[2] Comcast stocks were up 3.89 percent at $21.35 during late-morning trading on Thursday.[16]
Wall Street expected Comcast to post revenue of $8.17 billion and per-share profit of 19 cents excluding items, according to Reuters Estimates. [11] On a pro forma basis, which includes adjustments for certain acquisitions and dispositions, revenue for the quarter increased 10% to $8.4 billion from $7.6 billion reported in the same period last year.[4]
Broadband growth was strong but slowing, with the company adding 492,000 new broadband subscribers for the quarter, down 16% from last year.[1] Digital cable growth was also slower than expected, with the company adding 494,000 subscribers compared to last year's 658,000.[1]
On the switched digital video front, Stanzione said Arris is seeing "slower SDV deployments" than expected to date and therefore the company did not ship many D5 Universal Edge QAM platforms in the quarter. "Frankly the growth of this product line was slower than we expected," he said.[7]
"We're off to a solid start," said Chief Executive Brian Roberts. This year, the company said it plans to switch more analog channels to digital with the bandwidth reclamation plan affecting 20 percent of its market by year's end. Its ultrahigh speed Internet, known as Docsis 3.0, should also be available in a fifth of Comcast markets in 2008.[13] Brian Roberts, chairman and CEO of Comcast, said in a statement, "Our performance demonstrates that our operating strategy is working in an economic and competitive environment that continues to be challenging." Looking ahead, the company said it is confident that its outlook for the full year is achievable.[9]
Comcast faced tougher competition on the broadband front, where the average customer pays $42.18, a drop from last year's $43.08. [1] Comcast said last year's digital rollout was heavier because it ramped up shipping of digital set-top boxes as a July federal deadline loomed to switch to set-tops with separable security.[10]
Digital voice, or VoIP, subscribers, also increased. Take rates grew 11.5 percent to 5.1 million; approximately 80 percent of Comcast's VoIP users bundle their services.[16] With the net loss of 57,000 basic-cable subscribers (a 0.2% decline), Comcast had 24.69 million total cable subscribers at the end of the quarter.[3]
Free cash flow rose 59% -- to $702 million in the quarter compared with $442 million in Q1 2007.[5] In an indicator of core profitability, pro forma consolidated cash flow climbed 12% to $3.2 billion.[3]
Analysts estimate 2008 earnings at $1.27 a share on sales of $17.25 billion.[6] Sales rose 14 percent to $8.39 billion, beating analysts' $8.17 billion average estimate compiled by Bloomberg.[2]
Revenues were 16% lower than analysts' previous consensus revenue estimate of $328 million, according to Thomson Financial, in line with Arris' revised forecast announced in February.[7] The company posted net income of $5.4 million, an 86% decline from $37.6 million in the year-earlier period.[7] Excluding special items, adjusted net income for the quarter rose 10% and matched analysts' mean expectations.[4] Sanford Bernstein senior analyst Craig Moffett, in a note to investors, said the subscriber loss (a reversal of net gains a year ago) was in line with low expectations, and said there was strength to be found in the results.[5]
Spencer Wang, an analyst at Bear Stearns, had expected Comcast to add 478,000 digital subscribers, 335,000 high speed Internet subscribers and an increase of 639,000 digital phone subscribers.[11] Deutsche Bank analyst Doug Mitchelson highlighted Comcast's wireless ambitions and potential investment in a WiMax joint venture as a key variable for the company's future performance. Earlier this month, Comcast started offering faster Internet services in Minnesota's Twin Cities region, with plans to extend that type of next-generation system to its entire service area by 2010.[19] Expenses in the business services nearly doubled as Comcast ramped up marketing, but the company didn't provide financial breakdowns, likely since the focus is so new.[16] As for wireless, Roberts all but quashed notions Comcast would purchase a cell phone company. The question is "down the road should we extend services outside the home? To that end, we hired some folks to help us in our wireless thinking," he said.[13]
For digital phone service, subscribers spent $40.24, down from $42.44.[13] I doubt competition with FiOS or U-Verse has much to do with the decline in basic subs. These are the people that Comcast is trying to push into the digital tiers, so the channels available to basic subscribers is slowly being whittled away. These are also the people who are likely to be hit harder by the softening economy. These are the people most sensitive to price increases. I would imagine that Digital, HSI and VoIP are much more profitable areas; Comcast would probably rather have all of their subs on digital tiers and none on analog. As long as those are growing, they'll be fine.[1] The basic subscriber number includes all the other categories(and not just analog base tier subscribers). When you look at Comcast subscribers, if they don't have the basic subscriber, then they can't upsell them to the higher digital tiers, HSI, VOIP, etc.[1]
Comcast said it lost 57,000 basic video subscribers during the period compared with nearly 83,000 additions a year-ago.[11] Basic video subscribers declined 57,000 or 0.2 percent during the first quarter.[14]
Commenting on the results, Brian Roberts, Chairman and Chief Executive Officer of Comcast said, 'Our results for the first quarter mark a solid start to 2008.[4] In a conference call, executives said the programming segment benefited from some delays in booking marketing and programming costs in the first quarter, so percentage growth won't be so strong going forward, but it will still be robust.[3]
'''We'''re competing aggressively across all areas of our business, while continuing to invest for sustained growth,''' Time Warner Cable CEO Glenn Britt said today in a statement.[6] Time Warner Cable serves nearly 1 million customers and employs about 2,300 people in the region.[18] Time Warner owns 84 percent of Time Warner Cable's stock, with public stockholders owning the remainder.[8] Time Warner Inc. plans to spin off its remaining 84 percent stake in the cable-TV business. That's the word from the nation's second-largest cable-TV operator, after Comcast Corp.[18]
Bewkes previously said a sale was possible due to Time Warner Cable's "increasingly different capital and financial needs than our other businesses."[8]
WHAT'S AHEAD: Comcast and other cable companies are reported to be in talks with telecom and Internet companies to create a WiMax wireless network that would link computers, televisions and cell phones. [19] Internet subscriber growth was "the highlight'' of Comcast's report, Moffett said.[2] Comcast's broadband growth remains strong, and is clearly gaining share. Its Digital Voice growth is still accelerating.[5] Edit: I note that Comcast's share price is up about a dollar on the news, so investors don't seem too worried either.[1] Investors cheered the unexpected news, driving shares up 5.4 percent, or $1.11, to $21.66 in morning trading.[13] Company shares closed at $20.55 in Nasdaq trading, up 29 cents from the previous day's close.[12]
Arris during the quarter repurchased approximately 13 million shares in the open market for $76 million and also redeemed $35 million of convertible debt originally issued by C-COR and paid approximately $12 million to retire various acquisition liabilities.[7]
Infogrames to Buy Rest of Atari for $11 Million Infogrames Entertainment plans to buy the rest of beleaguered video games pioneer Atari for US$11 million, the companies said. Adobe Establishes Open Screen Project for Flash, AIR Adobe launched a new community development project on Thursday aimed at using its Flash and AIR (Adobe Integrated Runtime).[8]
Revenue in the Philadelphia giant climbed to $8.34 billion from $7.39 billion.[12] During the conference call, executives said revenue gains were encouraging but cautioned that Comcast is stepping up marketing spend due to competitive pressures, which will impact expenses.[3] Comcast added 492,000 subscribers, up 44% from fourth-quarter gains, "and topped consensus by nearly 50%.[5] In a conference call with analysts, Comcast executives said aggressive marketing, focused promotions and added flexibility to credit and collections boosted business.[13] Companies like Comcast have armies of accountants and analysts to identify where the most optimal profit points are.[1] PHILADELPHIA (AP) — Promotional offers and higher cable television spending fueled the first-quarter profits of Comcast Corp., which showed limited effects from an economic slowdown.[13]
The stock price of Comcast Corp., which was trading in a broad range of $16.11 to $29.41 during the past 52-week period, closed the regular trading session on Wednesday at $20.55.[4]
I tried a HD DVR and that was DOA and thats when i jumped to dish. If this is any indication of how things are for comcast I can see why they are loosing market share. I think they need to soften their promo deals and provide an overall lower price on their tier CATV services. [1] "I remain confident that we are well-positioned to meet the insatiable demand for more bandwidth and speed, driven by accelerating entertainment and information applications," Arris chief financial officer David Potts said on the call. Comcast has said it expects to be aggressive in deploying DOCSIS 3.0, passing up to 20% of homes in it its territories by the end of 2008. It launched "wideband" service with up to 50-megabit-per-second downloads in Minneapolis/St. Paul earlier this month. Overall, Stanzione said Arris is ramping up DOCSIS 3.0, with hardware shipments expected to begin in the latter part of this quarter and DOCSIS 3.0 software for CMTSs to ship in Q3. "We expect to be extremely busy" with DOCSIS 3.0, he said.[7]
The company said it will collaborate with BitTorrent Inc. to improve the transmission of large files over the Internet. Comcast canceled AZN Television, its Asian American channel, after having difficulty attracting advertisers and viewers.[19] Revenue from Internet subscribers rose 11% while telephone-based sales jumped 39%.[6]
Analysts in a Thomson Financial survey estimated a profit of 22 cents a share. [6] I pay right at $60 for expanded basic. $59, I believe, with all fees and taxes included in that price.[1]
SOURCES
1. Comcast First Quarter Results - Telcos pulling video subs, but Comcast dominates VoIP - dslreports.com
2. Bloomberg.com: Worldwide
3. Comcast Earnings Solid Despite Decline in Cable-TV Subscribers - 5/1/2008 12:24:00 PM - Broadcasting & Cable
4. Comcast Q1 Net Declines, Hurt By One-time Gain Last Year; Adj. Profit Rises 10%; Reaffirms FY08 Outlook - Update [CMCSA] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
5. Comcast Revenue Climbs 14%, As Basic Video Subs Drop - 5/1/2008 8:19:00 AM - Multichannel News
6. Time Warner Cable 1Q Profit Beats Expectations - TVWeek - News
7. Arris Expects Rebound In Comcast Business - 4/29/2008 4:02:00 PM - Multichannel News
8. PC World - Business Center: Time Warner to Sell Cable Division
9. Comcast Earnings Match Estimates [CMCSA] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
10. The Associated Press: Comcast 1Q profit falls 12 pct, customer cable spending up
11. Comcast quarterly profit declines, loses subs | Reuters
12. Comcast revenues rise 14%, profits slip | Philadelphia Inquirer | 05/01/2008
13. The Associated Press: Comcast 1Q profit falls 12 pct, customer cable spending up
14. Good Quarter for Comcast
15. Free Preview - WSJ.com
16. Comcast Loses Basic Subs, Adds Broadband Users
17. Time Warner to spin off cable TV biz
18. GoErie.com: Time Warner Cable sale won't affect customers
19. Earnings Preview: Comcast
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