Comcast profit nearly triples

The Baltimore Sun

CHICAGO -- Comcast Corp. said yesterday that its fourth-quarter profit nearly tripled because of increased demand for its digital video, broadband and phone services, but the company's stock declined on concerns about its spending estimate for this year.

Shares of Comcast fell $1.43, or 3.2 percent, to close at $42.92 on strong volume of more than 26.2 million shares.

The Philadelphia-based company also said that it would split its stock 3 for 2 on Feb. 21.

Comcast, the largest U.S. cable company, said its net income rose to $390 million, or 18 cents a share, from $133 million or 6 cents a share in the year-ago quarter.

Excluding adjustments that reduce gains related to its Adelphia Communications and Time Warner Cable acquisitions, Comcast would have earned $459 million, or 21 cents a share, in the latest period.

Revenue rose to $7.03 billion from $5.42 billion.

Analysts polled by Thomson Financial had, on average, expected Comcast to earn 24 cents a share on revenue of $7.13 billion.

In 2007, cable expenditures are seen totaling about $5.7 billion, compared with the previous year total of $4.6 billion.

"That forecast is much higher than anyone expected," said Craig Moffett, cable and satellite analyst at Sanford C. Bernstein & Co. "That means that the stock is much less attractively priced on a free cash-flow yield basis than people had assumed going in."

He added that the fourth-quarter results were extremely good, as was most of the 2007 outlook. "In particular, investors had to be delighted with the strong basic-subscriber growth," he said. "That was the last piece of the puzzle for the Comcast 'triple-play' growth story."

Basic-cable customers grew by 110,000 in the fourth quarter to 24.2 million. At one point, basic subscribers had represented the one category that wasn't growing consistently for cable operators. Now, it appears that even customers who don't have a full suite of channels can appreciate the other aspects of cable service.

The so-called "triple-play" bundle - digital video, broadband and phone service - is key for Comcast and the cable operators in their battle with satellite firms and regional phone companies.

"We've said from the beginning that if there's a war between cable and the [telecommunications companies], cable's going to win," Moffett said.

The problem, he said, is that this apparent inevitability is factored into cable stocks, which had fallen out of favor earlier in the decade.

"Stock-price performance isn't about whether you're good," he added. "It's about whether you're better, better than people expected and better than you were yesterday."

Comcast's cable revenue rose 14 percent to $6.9 billion, as video revenue rose 9 percent. Operating cash flow rose 17 percent to $2.7 billion.

Total revenue-generating units - or the total number of customers generating revenue - rose by 1.6 million to 50.8 million.

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