Comcast’s Earnings Triggers Big Decline In Cable Stocks
Analyst: Investor Confidence is “Ticking Down Substantially”
By Mike Farrell -- Multichannel News, 10/25/2007 9:49:00 AM
Comcast’s disappointing third quarter results resounded across the cable industry Thursday, with four of the six publicly traded cable operators hitting new 52-week lows.
Comcast lost 65,000 basic customers in the third quarter – its second consecutive period of basic subscriber declines – which they attributed in part to competition from telephone companies. Couple that with sluggish high-speed Internet subscriber growth and slightly higher than expected capital expenditures for the period, and investors began heading for the exits.
Comcast shares were hit hard early on, dipping as low as $20.82 each Thursday (a new 52-week low) before rising slightly to $21.28 per share, down $2.57 each or nearly 11%.
Also hitting new 52-week lows were Time Warner Inc., ($17.60) before closing at $17.71 (down 65 cents or 3.5%); Time Warner Cable ($29.25) before closing at $29.40 (down $2.61 each or 8.5%); and Mediacom Communications ($5.57) before closing at $5.70 per share, down 38 cents each or 6.25%.
Other stocks in the sector may not have hit new lows but didn’t fare much better. Cablevision Systems, which just came off the rejection of its ruling Dolan family’s going-private offer, fell $1.42 each (4.6%) to $29.40 per share and Charter Communications dipped 58 cents to $1.97 per share, down 22.8% each.
Satellite TV stocks fared a little better but still lost ground: EchoStar Communications closed at $49.58 per share (down 41 cents or 15) and DirecTV Group dipped 1% (29 cents per share) to $25.22 each.
Pali Research media analyst Richard Greenfield, who had already lowered his third quarter expectations for the entire cable sector prior to the Comcast earnings announcement, said in an interview that he may have to lower those forecasts yet again.
“Clearly they [Comcast] disappointed already lowered expectations from us and others,” Greenfield said. “I think the question is, how much confidence do people have going forward. Clearly the stocks today [are showing] that people’s confidence level is ticking down substantially.”
