Cox Touts New-Service Revenues in 3Q

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Cox Communications Inc. hit analysts' targets with its
third-quarter results last week, as strong new-service penetration and basic-subscriber
growth drove an 8 percent rise in operational cash flow.

Cox's net loss of $55.5 million, or 20 cents per
share, beat analysts' estimates, and it was about 32 percent better than the $82
million (30 cent) loss in the same period a year ago. Top-line revenue growth of 10
percent, to $416 million from $378.8 million a year ago, and operating-cash-flow growth of
8 percent, to $158.9 million from $147.4 million, were in line with recent forecasts.

In its press release, Cox emphasized that it has about
110,000 customers taking telephony and digital services, and that internal
basic-subscriber growth, at 2.2 percent, was relatively strong. Cox ended the quarter with
3.4 million subscribers.

SG Cowen Securities Corp. analyst Gary Farber said
Cox's telephony-customer count (18,200) at Sept. 30 was about 2,200 more than he had
projected, and its digital-TV-customer figure of 54,609 was ahead of his forecast of
90,000 for the year.

"The message would be the new services and the 2
percent-plus cable-subscriber growth," Farber said. Otherwise, it was an
"in-line quarter."

During the quarter, basic-cable revenue rose 11 percent, to
$302.8 million from $272.8 million, while premium-service revenue edged up just 2 percent,
to $47.9 million. Pay-per-view revenue climbed 5 percent, to $10 million, and advertising
revenue jumped a strong 25 percent, to $32.4 million.

The costs of launching data and telephony service cut
Cox's operating-cash-flow margin (as a percentage of revenue) to 38.2 percent from
38.9 percent. Cox has launched its Cox@Home residential data services in eight markets,
taking in $5.1 million in quarterly revenue.

Cox's digital-phone service is available in eight
markets. Total telephony revenue, including commercial customers, hit $8.7 million in the
quarter, up from $3.4 million in the same period a year ago.

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