Comcast Lowers Financial Guidance
Cable TV Operator Reduces Revenue and Customer Growth Projections; Increases Capital Expenditures
By Steve Donohue -- Multichannel News, 12/4/2007 11:39:00 AM
Look for Comcast stock to take a hit on Wall Street Wednesday, after the nation’s largest cable TV operator said Tuesday night that it expects to spend more money and generate less revenue and new customer additions in 2007 than previously anticipated.
“Reflecting an increasingly challenging economic and competitive environment and consistent with trends across the sector, revenue generating units (RGUs) are now expected to increase by approximately 6 million to 57 million, versus previous guidance of approximately 6.5 million additions,” Comcast said in a prepared statement. RGUs refer to Comcast’s video, high-speed Internet and telephone subscribers.
The announcement came on the eve of a presentation Comcast co-chief financial officer Michael Angelakis is scheduled to give on Wednesday. Angelakis is scheduled to speak at 8 a.m. at the USB Global Media & Communications Conference in New York. The presentation will be available live on Comcast’s Web site.
Comcast also reduced its revenue guidance for 2007, saying that it expects to post growth of 11% for the year, compared to previous guidance of 12%. It said cash flow will also take a hit, predicting flat cash flow growth of approximately 13%, down from previous guidance of 14% growth for 2007.
While Comcast said it expects to generate less revenue, the cable TV operator also said it expects to spend more money. It said it expects capital expenditures to be approximately $6 billion for the year, a 5% increase from earlier guidance.
Comcast attributed the increase in capital spending to “increased advanced digital set-top box purchases, the company’s digital acceleration program, expanded network enhancements and acquisition related investments.”
Free cash flow will also take a hit, Comcast said. It said Tuesday that it expects free cash flow to be approximately 80% of its performance in 2006, compared to previous estimates of 2007 consolidated free cash flow of at least 90% of 2006.
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