Comcast's profit rose 80% in first quarter

BUSINESS DIGEST

April 27, 2007|By Bloomberg News

PHILADELPHIA -- Comcast Corp. reported yesterday an 80 percent increase in first-quarter profit thanks to high demand for packages of television, telephone and Internet services.

Net income increased to $837 million, or 26 cents a share, from $466 million, or 22 cents, for the first quarter last year, the largest U.S. cable-television provider said. Revenue rose 32 percent to $7.39 billion.

Customers signed up for high-speed Internet at a record rate and phone and digital-TV subscribers rose more than analysts predicted. Some investors had been hoping for even better results after Comcast Chief Executive Officer Brian L. Roberts said this month that the business was "on fire."

"The expectation was a blowout quarter and they delivered a good quarter," said Katherine Styponias, an analyst with Prudential Equity Group.

Shares of Comcast, which also owns the E! Networks and the Golf Channel, fell 99 cents, or 3.5 percent, to close at $27.10 on the Nasdaq stock market.

The shares also were hurt by concerns that Roberts may overspend in his effort to upgrade the company's networks. Capital spending rose to $1.44 billion last quarter, causing free cash flow to drop 45 percent to $442 million.

Before a 5-cent gain related to the sale of a cable system, profit was 17 cents a share, meeting analysts' estimates.

In addition to its new high-speed customers, Comcast signed up about 571,000 new digital voice customers, an increase from 231,900 a year earlier, and 644,000 digital-cable customers, an 82 percent increase.

"The results speak to the extreme competitive strength Comcast has right now," said Craig E. Moffett, a cable analyst with Sanford C. Bernstein & Co. in New York.

Comcast maintained its forecast for the rest of the year, including 11 percent revenue growth and capital spending of about $5.7 billion. Operating cash flow will increase at least 13 percent in 2007 and consolidated cash flow will be little changed, Comcast predicted.

Comcast's results also were buoyed by the acquisition of Adelphia Communications Corp. in July. Basic cable subscribers rose to 75,000 from 50,300.

Comcast and Time Warner Inc. bought assets from Adelphia in a $16.7 billion joint acquisition. After trading some systems, the deal added 2.6 million subscribers to Comcast's base in states such as Florida and Pennsylvania, bringing the total to more than 24 million. Time Warner Cable, the second-largest cable provider, had 13.4 million as of December.

By offering three products in a package, Comcast was able to convince customers to spend more last quarter. The average revenue per video customer was $96.39, up from $86.18 a year earlier. Customers spend an average $43.26 on high-speed Internet, up from $42.53 in the first quarter last year.

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