Cox Communications Inc. reported strong first-quarter revenue and
cash-flow results, fueled by increases in new services like high-speed data,
despite increased pricing pressure from regional Bell operating companies.
Revenue for the first quarter grew 16 percent to $1.05 billion and operating
cash flow was up 22 percent to $479 million.
For the period, Cox increased its high-speed-data customers by 154,000.
Telephony customers increased by 64,000 and digital cable rose by 77,000
Basic subscribers were up 0.6 percent, or 35,000 customers, and the MSO ended
the quarter with 6.3 million subscribers.
In a conference call with analysts, Cox senior vice president of marketing
Joe Rooney said despite competitive digital-subscriber-line offerings from RBOCs
like SBC Communications Inc. ($25 per month in select markets) and Verizon
Communications (which unveiled a $34.95 DSL service Friday), Cox was holding its
'The SBC offering has more strings attached to it than Pinocchio,' Rooney
said. 'It's only for new customers, you have to sign a one-year contract and
[the discount] is only for the first year. It hasn't impacted us at all. Price
is only one variable. If price was the most important thing, we'd all be driving
Cox CEO Jim Robbins added that new pricing strategies by competitors would
have no impact on the company's plans.
'There is no change in our strategy,' Robbins said. 'We believe in selling a
bundle of services. There is pricing flexibility inside that bundle. Also, there
is a question as to the sustainability and profitability of our competitors'
The bundle appears to be working for Cox. In the first quarter, the MSO added
150,000 bundled customers, defined as subscribers who take at least two
services. Cox has a total of 1.8 million bundled customers, or 29 percent of its
total customer base.
Investors apparently weren't convinced of Cox's ability
to stave off DSL competition.
Share prices dropped $1.75 to $30.30 at the closing bell.