Analyst Downgrades Insight


On the heels of a disappointing second quarter and the resignation of one of
its top executives, Insight Communications Co. Inc. received another blow
Thursday when Fulcrum Global Partners LLC cable analyst Richard Greenfield
downgraded the stock to "sell" from "neutral," citing a possible shift in
strategy for the New York-based MSO.

As a result, Insight stock took a pounding Thursday, dropping nearly 6% (63
cents per share) to $11.33 in 4 p.m. trading.

In his report, Greenfield said that in light of Insight’s poor second-quarter
results -- it lost 13,000 basic subscribers and digital- and
telephony-subscriber additions were weaker than expected -- he believed the MSO
was contemplating a strategy shift from growing advanced services to focusing on
accelerating basic-subscriber growth.

"While [Insight] has high-quality, well-clustered cable systems, it has spent
a significant amount of time and effort focusing on new products (particularly
telephony) and advanced technology, which we increasingly sense has distracted
management from focusing on the core video/data business," Greenfield wrote.

The downgrade also comes almost two weeks after Insight president and chief
operating officer Kim Kelly announced her resignation Aug. 22, stating that she
wanted to pursue other opportunities. Kelly will stay on at Insight until Nov.
30 to help with the transition.

In an interview, Insight CEO Michael Willner said there was no major strategy
shift in the works.

"We’re always reviewing our strategy, but that is nothing new," Willner said.
"We’re in the middle of our budget season right now -- this is exactly when you
review your strategy for next year."

Willner added that Insight was taking a closer look at its basic-subscriber
business, "but I don’t think that is a shift away from what we’re doing."

The MSO said on its second-quarter conference call last month that the
subscriber losses were due to seasonal disconnects when college students leave
school and transients move to summer residences.

The telephony slowdown was mainly due to delays in rolling out the service in
the first half of the year as Comcast Corp., Insight’s telephony partner, got
its hands around the telephone business. Insight had said on the call that it
expected telephony adds to pick up in the second half.

Still, Greenfield believes that in light of the bad quarter, it is likely
that Insight will have to revise its cash-flow guidance downward.
The company had said that it expected 11.5%-13% cash flow growth for the

"It’s not that I think it’s going to be a train-wreck-type year," Greenfield
said in an interview. "I think growth is occurring more slowly than they
originally expected and they’re going to have to bring guidance down that was
fairly aggressive going into the year. They’ve already signaled the bottom end
of the range, and I think the bottom end of the range is really tough to get