Comcast Q3 strong on all fronts

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NEW YORK -- Comcast Corp. posted third-quarter results Thursday that breezed past many Wall Street expectations, boosting its Class A special stock 3% to $39.85.

Analysts said the latest financials were tricky to analyze as Comcast recently acquired cable systems from Adelphia Communications and traded some with Time Warner Cable, which led to one-time gains. However, most lauded the continued success of the triple-play product bundle, particularly strong telephony and high-speed Internet user gains.

The largest U.S. cable operator reported a profit of $1.2 billion, compared with $222 million a year ago. But the latest figure included one-time gains of $694 million from the Adelphia deal and $234 million for the transfer of certain cable systems to TWC. Excluding these items, Comcast earned $548 million.

Third-quarter revenue also exceeded Wall Street expectations, rising 21.8% to $6.4 billion, or $6.9 billion when assuming that all recent acquisitions and deals were effective as of the start of 2005.

On a pro forma basis, which assumes that Comcast has owned the Adelphia assets for at least a year, cable revenue rose 12% to $6.6 billion, with total customers up nearly 1.5 million -- Comcast's biggest quarterly gain ever -- to 49.2 million.

Basic cable customers grew by 10,000 in the third quarter, boosting Comcast's total to 24.1 million and reversing a year-ago loss of 44,000.

The company also signed up 1.8 million broadband customers -- its biggest quarterly gain in two years -- to boost its total user base to 11 million.

In addition, Comcast won 483,000 digital telephone users, ending the third quarter with 2.1 million.

"We're setting new records in the third quarter, underscoring the strong momentum in our cable business," Comcast chairman and CEO Brian Roberts said. "All our key metrics are accelerating."

Comcast's content unit grew revenue 9% to $258 million, with operating cash flow up 22% at $88 million. The unit includes, among others, E! Entertainment Television, Style Network and sports channel Versus.

Asked during a conference call if Comcast might make a big acquisition of a content, telecom or Internet firm, Roberts declined comment, but said he feels "a lot has changed" since a failed takeover play for the Walt Disney Co., and his content unit "is doing quite well." He added he doesn't feel Comcast in general has to buy anything as it is "in a very enviable position" strategically.

Also during the call, Comcast chief operating officer Stephen Burke said he has seen 32 quarterly earnings conference calls at the firm, but "this is the best" financial report ever.

Based on the strong quarterly performance, Comcast reaffirmed its full-year growth targets.

Analysts had few complaints. The 10,000 basic video user gain "could be the only weak point we see versus our estimates," said Miller Tabak + Co. analyst David Joyce, who predicted 91,000 additions.

Bear Stearns analyst Spencer Wang predicted "continued outperformance" by Comcast shares thanks to strong subscriber momentum across the board.
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