Comcast Corp. saw its revenue and profits surge during the
fourth quarter and year ended Dec. 31, fueled mainly by growth in its QVC Network
subsidiary, an aggressive rollout of digital-cable services and growing success with its
Comcast@Home-branded @Home Network high-speed Internet service.
For the year, Comcast reported consolidated revenue of
$5.145 billion, a 15.2 percent increase from 1997, and consolidated operating cash flow of
$1.497 billion, up 15.7 percent.
Setting aside acquisitions and other transactions that
occurred during the year, Comcast said cash flow for the fourth quarter rose by 10 percent
to $421.3 million, and revenues jumped by 11.6 percent to $1.447 billion.
The good news sent Comcast's stock surging by $4.938 per
share in Feb. 22 trading, to $72.188, before closing Thursday at $72.87.
Gary Farber, an analyst with SG Cowen Securities Corp. in
New York, said that although the cable sector has been hot and some of Comcast's success
could be attributed to riding the wave of a popular market sector, there is more to
"Management has been executing above and beyond that
rising tide," Farber said.
Comcast reported significant growth in virtually all of its
business segments -- particularly cable television and Comcast@Home.
For example, cable revenue surged 8.3 percent to $2.287
billion for the year, while operating cash flow grew 10 percent to $1.101 billion. In the
three-month period, revenue increased 9.2 percent to $596.2 million, and operating cash
flow was $294.1 million.
The cable segment also added 42,000 subscribers for the
year -- a 1.4 percent increase -- and cash-flow margins improved from 49 percent to 49.3
percent in 1998.
"This was really a year of delivering the goods,"
said John Alchin, Comcast's senior vice president and treasurer.
Comcast boosted its digital-cable-subscriber total to
100,000 since launching the service in June; more than doubled its available digital
footprint to 65 percent of its customer base; and grew the number of monthly digital
installs from between 3,000 and 3,500 in the third quarter to more than 4,000.
QVC was a key contributor to Comcast's bottom line, with
sales of $2.403 billion for the year, a 15.4 percent jump. Operating cash flow was $434.2
million, a 28.6 percent increase over the previous year. In the fourth quarter, revenue
increased by 17 percent and operating cash flow rose by 33.4 percent, to $754.2 million
and $142.6 million, respectively.
Comcast also said it is rapidly gaining Comcast@Home
subscribers, and it now has more than 60,000. The company expects to double the footprint
of the service in 1999, making service available in 12 to 15 markets. Comcast@Home is
currently available in nine markets.
The company is still holding off for the moment on
providing telephony services over its network. However, Comcast president Brian Roberts
told analysts that Comcast, Cox Communications Inc. and MediaOne Group Inc. are
negotiating as a block with AT&T Corp. regarding telephony.
"There is an opportunity to facilitate and really sort
out some of the issues with AT&T, along with Cox and MediaOne," Roberts said.
"All three companies think that it could be in the best interests of their
shareholders to do a deal with AT&T, but there is certainly a range in which it would
not be. The goal of talking jointly is to either do something together [with AT&T], or
to perhaps advance telephony without AT&T jointly."
Roberts added that there is no set time frame for the three
companies to forge a telephony deal -- particularly since AT&T has given its telephony
agreement with Time Warner Inc. first priority. AT&T has said that it expects to take
at least 90 days to sort out the details of the Time Warner agreement.
"I personally think that we shouldn't expect anything
right away," Roberts said.