Comcast reports double-digit growth

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NEW YORK -- Comcast Corp. on Thursday reported a second-quarter profit that increased 28% on a record customer additions despite a basic subscriber decline and weaker-than-expected high-speed Internet user additions.

"We are again reporting double-digit growth in cable revenue, our 28th consecutive quarter of double-digit operating cash flow growth and our fourth consecutive quarter of record-breaking revenue-generating unit additions," Comcast chairman and CEO Brian Roberts said.

The stock fell in early trading, though, as some analysts wondered whether the second half of 2007 would be as strong as Comcast management is projecting, especially in terms of broadband user growth.

Roberts on Thursday predicted "accelerating" cable unit growth in the back half of the year.
The largest U.S. cable operator posted a second-quarter profit of $588 million, compared with $460 million in the year-ago period.

Philadelphia-based Comcast also reported a 31% revenue gain to $7.71 billion in the historically weak second quarter. Cable unit revenue rose 12% to $7.3 billion.
Citing the appeal of its triple-play service bundle, Comcast said its cable division reached 1.6 million RGU additions in the period, 94% above the growth in the year-ago quarter.

As expected, basic cable subscribers declined in the latest period. Comcast reported a decrease of 95,000, up from a year-ago drop of 91,000, to 24.1 million as of June 30. However, for the first half of 2007, the firm's basic subscriber count is down only 20,000, compared to 40,000 in the year-ago time frame.

Comcast added 330,000 high-speed Internet customers in the second quarter, while some analysts had projected the figure to be above 400,000.

However, the cable company signed up 823,000 new digital video subscribers, more than double last year's additions of 337,000 and well ahead of Wall Street estimates.

Comcast also added 671,000 digital phone users in the second quarter to exceed the 3 million customer mark.

Second-quarter advertising revenue continued to decline, trending down 1% in the quarter to $399 million, with Comcast citing "the continued weakness in political and regional advertising."

Comcast on Thursday reaffirmed its full-year guidance, including its cable revenue growth estimate of at least 12% and cable operating cash flow gains of 14% or more. It also continues to target about 6.5 million RGU net additions, or 30% above 2006 levels, and $5.7 billion in cable capital expenditures.

Companywide revenue will increase at least 11%, with operating cash flow up at least 13% and free cash flow about the same as in 2006, Comcast also reiterated.
In the second quarter, the cable giant spent $752 million to buy back 27.9 million of its shares. Overall, it has repurchased $8.6 billion in stock since 2003, with $1.8 billion left in its current buyback program.

Credit Suisse analyst Bryan Kraft said most of Comcast's second-quarter results were in line with Wall Street expectations. But results "came in below our estimates as a result of basic video and broadband subscribers, as well as advertising revenue and subscriber ARPU all coming in slightly below our estimates," he said in a report.
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