Comcast Triples Income, Profit in Q1

Apr 27, 2006  •  Post A Comment

Comcast Corp. posted first-quarter net income of $466 million Wednesday, triple the year-earlier figure, driven by gains across all of its businesses, particularly its high-speed Internet and digital cable services.

On a per-share basis, the Philadelphia-based cable giant’s profit surged to 22 cents per share from 6 cents a share a year ago. The per-share figure, which beat Wall Street estimates of 14 cents a share, include the effects of a $64 million investment gain and $34 million in stock-option compensation expenses.

Wall Street analysts widely praised Comcast’s results.

“The results strongly position Comcast for the rest of the year and suggest that Comcast should easily achieve its guidance of 1 million [cable-telephone] additions and 3.5 million revenue generating units,” said Bernstein Research analyst Craig Moffett.

Revenue rose 10 percent to $5.9 billion, driven by growth in both the company’s cable operations and cable channel businesses, which includes networks OLN, E! Entertainment and The Golf Channel.

Comcast’s results, the first cable report of the quarter, should serve as a bellwether for the rest of the cable industry, which, after years of being whipsawed by its competition with satellite, is beginning to gain traction with its three-product bundle of video, voice and high-speed data-something satellite companies have yet to be able to match. The results are also a ringing endorsement of Chairman Brian Roberts’ strategy of using video-on-demand as a tool to renew consumer interest in Comcast’s video product.

Remaining cable operators and satellite companies are set to report results in early May.

“This was a Comcastic quarter,” quipped Mr. Roberts, referring to the company’s advertising campaign that touts the product bundle. “I can’t imagine a stronger start to this year.”

Comcast’s core cable operation fueled much of the growth in the quarter, with revenue advancing 6 percent to $5.6 billion.

A major factor behind the company’s growth was the addition of 437,000 high-speed Internet customers in the quarter, compared with 414,000 added a year ago, which drove revenue for that business up 22 percent to $1.1 billion.

The video business posted gains as well, with the company adding 340,000 digital customers and reversing a decline in basic cable subscriptions by adding 47,000 new customers. Last year the company added 200,000 digital-cable subscribers, but lost 29,000 basic-cable subs.

Meanwhile, the company’s phone business reported 211,000 new customer additions in the quarter as the product became available in more markets. A year ago, the company, which was just starting out with its telephone product, added 7,000 customers.

Comcast’s so-called Content segment, which includes the cable channels, saw its revenue rise 12 percent to $239 million, reflecting increases in network ratings and advertising revenue. However, segment profit fell to $9 million from $31 million a year ago due to higher expenses associated with OLN’s broadcast of National Hockey League games, which began in the 2005 fourth quarter.