Cable Operators

Comcast’s Good News Gets Better

7/07/2006 8:00 PM Eastern

Banc of America Securities cable and satellite analyst Doug Shapiro maintained his “buy” rating on Comcast Corp. after a series of meetings with management reinforced his optimism for the future.

In a research note, Shapiro wrote that meetings over several days with Comcast executive vice president, co-chief financial officer and treasurer John Alchin and vice president of investor relations Marlene Dooner reinforced his confidence in the investment case for the nation’s largest cable operator, “namely that the good news seems to be getting better and the bad news doesn’t seem to be getting worse.”

Shapiro wrote that momentum for Comcast’s voice-over-Internet Protocol telephony rollout continues to build and apparently will keep the company on pace to meet or surpass guidance for net additions this year. Shapiro was also assured that Comcast’s strong first-quarter results contained no anomalies, meaning that strong first-quarter margin growth should continue into the second and translate into even stronger cash-flow growth.

While Comcast is aware of investor sensitivity to growing capital expenditures, management assured Shapiro that it is confident capex will remain flat for the year, even in light of the accelerated phone rollout. Shapiro also said programming cost increases for the year should be between 5% and 6%, despite high-profile negotiations with The Walt Disney Co. and News Corp.

September