‘Comcastic’ 1Q Meets Expectations

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Analysts were expecting strong growth in Comcast Corp.’s first-quarter results. The company delivered in spades, and Wall Street responded, driving the stock up more than 5% ($1.56 per share) to $30.66 each in early afternoon trading Thursday.

Comcast turned in one of its best first quarters ever -- basic subscribers rose by 47,000 (its best first quarter since 2003); digital customers rose by 340,000 (the best first quarter in its history); high-speed-Internet subscribers were up 437,000 (its best first quarter on record); and voice-over-Internet-protocol telephony customers were up by 211,000 in the period (more than it added in all of 2005).

“Let me be corny and say this was a ‘Comcastic’ quarter,” chairman and CEO Brian Roberts said on a conference call with analysts.

Analysts have been hotly anticipating Comcast’s first-quarter results in light of the highly optimistic view company executives exhibited at the National Show in Atlanta earlier this month.

At least one -- UBS Warburg LLC cable and satellite analyst Aryeh Bourkoff -- increased his basic-subscriber target from 5,000 to 45,000 additions in the period in light of the optimism generated from the National Show.

Revenue for the quarter was up 10% to $5.9 billion, and operating cash flow increased 11% to $2.2 billion.

During the conference call, Comcast chief operating officer Steve Burke said the basic-subscriber growth was a continuation of a trend that started in the fourth quarter (when Comcast added 40,000 basic customers), adding that all signs are pointing to that growth continuing.

He added that performance was driven by strong digital and high-speed-Internet additions, as well as a reduction in analog-only customers, which now total fewer than 8 million subscribers, down from 10 million a year ago.

Comcast introduced an enhanced basic tier last year -- which gives price-conscious customers digital boxes and access to some video-on-demand services -- targeted toward those analog-only customers, and the results showed that the strategy is working.

Burke said it was too early to tell the impact of Comcast’s VoIP service -- dubbed “Comcast Digital Voice” -- on basic-subscriber growth, but the company is signing on an average of 15,000 new phone customers per month, with some weeks topping 20,000. VoIP service is currently available to 20 million homes, and that should increase to 30 million by year-end, he added.

Burke said that in markets where Comcast is aggressively marketing its $99-per-month triple-play package -- Boston, Philadelphia, Indianapolis and Pittsburgh -- the results are even better. Average revenue per unit with those promotional customers is ranging from $120-$130 per month as they take more expensive digital and premium-channel tiers.

Comcast is also gaining ground on digital-subscriber-line services offered by telephone companies. Burke said 34% of Comcast’s net high-speed-Internet additions in the quarter were former DSL customers, up from 23% in the same period in 2005.

“We now get as many customers from DSL as we do from AOL narrowband,” he added.

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