Slow Sub Growth Tags Cox


Slower-than-expected subscriber growth in the second quarter offset gains in
cash flow and revenue at Cox Communications Inc., sending its stock down more
than 7 percent in Monday-afternoon trading.

Cox reported second-quarter cash-flow growth of 13 percent and revenue growth
of 14 percent in the period, but investors were wary of slow growth in basic
subscribers in the period -- 0.5 percent, compared with 2 percent for its peers
-- and of warnings from Cox management that the numbers would not improve

In a conference call with analysts, chief financial officer Jimmy Hayes said
subscriber growth was affected by seasonal disconnects and the expiration of an
aggressive marketing plan for digital cable and high-speed data.

Although Hayes said a new marketing campaign that started in June -- which
offers new Cox subscribers installation and service discounts -- has caused
improvement, he didn't expect it to be enough to reverse the downward trend this

Hayes reduced Cox's third-quarter basic-subscriber-growth projections to 1
percent from a range of 1.5 percent to 2 percent.

SG Cowen Securities Corp. cable analyst Gary Farber said that while Cox had a
good financial quarter and should report more robust numbers in the second half
of the year -- historically its strongest period -- investors apparently didn't
want to wait.

'It's a tough stock market,' Farber said. 'Investors are not going to wait
around to see how it plays out.' Cox stock fell $2.89 per share to close at
$39.30 Monday.

The falloff affected other stocks in the sector, with Charter Communications
Inc., Adelphia Communications Corp. and Cablevision Systems Corp. losing the
most ground.

Adelphia dropped $2.03 to $36.48 per share; Cablevision lost $1.62 to close
at $56.02; and Charter fell $1.39 to $22.19.