Comcast loses 9 cents a share, but sales zoom 20%

Class A shares soar 10% after falling 30% since Dec.

May 02, 2002|By BLOOMBERG NEWS

PHILADELPHIA - Comcast Corp., the cable-television operator that plans to buy AT&T Corp.'s cable unit, posted an $88.9 million first-quarter loss on investments and the costs of buying and upgrading systems for digital TV and Internet service.

The first-quarter loss of 9 cents a share compared with net income of $1 billion, or $1.04, a year ago. Analysts had expected Comcast to earn 10 cents a share on $2.57 billion in sales.

Sales rose 20 percent, to $2.67 billion, more than analysts expected. Average monthly customer bills increased 12 percent, the company bought cable systems, and its QVC home-shopping channel sold more products.

President Brian L. Roberts told investors in a conference call that he expects to offset an expected drop in the growth of basic cable customers by offering new products, including movies on demand.

More than half of the first quarter's 12 percent increase in cable revenue to $1.47 billion resulted from selling new products.

"Data and digital will be the growth drivers of the company," said Alan Muschott, a money manager at Franklin Advisors, owner of 1 million Comcast shares. In the first quarter, selling those products "paid off with better-than-expected growth," he said.

Comcast will meet the company's previous forecasts, including cable-unit revenue growth this year of as much as 12 percent because it is selling new products, Treasurer John R. Alchin said in the conference call with analysts.

That forecast and Comcast's first-quarter cable sales figure assumed that certain acquired cable systems were part of the company in the quarter last year.

Class A Comcast shares rose $2.96 to $31.15. They had fallen 30 percent since the company agreed Dec. 19 to pay $72 billion for AT&T's rival cable unit, the nation's largest.

The shares rose yesterday because first-quarter sales and profit, excluding some costs, rose more than analysts expected, investors said.

Sales at Comcast's QVC unit rose 12 percent to $993.5 million. Sales also rose because Comcast acquired cable systems from AT&T in April and June last year serving 697,000 subscribers.

In the year-ago period, the company had $2.29 billion in pretax gains on investments and cable-system swaps.

In the latest period, the company had a pretax loss of $248 million for investments, mostly for the decline in the value of shares of Sprint PCS, Comcast Finance Vice President William E. Dordelman said in an interview.

Comcast's write-downs on cable upgrades rose 39 percent to $333.8 million. Amortization to write down the difference between the price of acquired assets and their value fell 89 percent to $53.3 million.

Profit excluding those costs, interest and taxes rose 27 percent to $808.2 million, or 85 cents a share. Analysts had expected 81 cents a share.

The company said total cable subscribers were up 0.9 percent to 8.51 million compared with the first quarter a year ago.

AT&T is planning to spin off its Broadband unit to Comcast for $72 billion this year. The proposed company, AT&T Comcast Corp., would be the largest cable company in the nation, with 22 million customers in 41 states. The purchase has yet to receive the approval of federal regulators.

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