Cox Delivers a Solid Fourth

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Amid the noise from Comcast Corp. and The Walt Disney Co. last week, Cox Communications Inc. reported solid fourth-quarter revenue growth of 12% and full-year growth of 14%, spurred by its bundling strategy.

"With laser-like focus on our operations, including a number of productivity initiatives, we generated significant improvement in operating income margin and improved operating cash flow margin by 150 basis points in 2003," CEO Jim Robbins said. "Our bundling advantages and deployment of [video-on-demand], HDTV and [digital video recording] services further bolstered our video service against [direct-broadcast satellite] competition, and will help us drive continued growth in digital penetration in 2004."

For the quarter, Cox generated $162 million in operating income, $561 million in cash flow and $1.5 billion in revenue.

For the full year, Cox generated $586 million in operating income and $2.1 billion in cash flow on $5.8 billion in revenue. Cox generated a 41% increase in operating income and a 19% increase in cash flow for 2003.

Cox added 82,967 digital subscribers in the quarter, to end the year at 2.1 million. The data ranks grew 144,402, to almost 2 million subscribers, while Cox added a record 76,691 phone customers to end the year at just under 1 million telephony homes.

Cox said it added 75,000 DVR and HDTV subscribers from Oct. 1, 2003 through Jan. 31, 2004.

There was one chink in the numbers: lower average revenue per subscriber derived from high-speed data customers. That metric dropped from $43 per month in the third quarter to $41.37 in the fourth quarter.

A number of factors contributed to the drop, Cox said, including increased consumer cable-modem purchases, higher self-installation rates and bundling discounts.

Cox estimated 2004 revenue would rise 11.5% to 12.5%, and cash flow would rise 14% to 15%, as revenue generating units grow by 1 million.

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