News summary for 10/25/07
Comcast Q3 profit takes a hit; Market punishes entire cable industry
By Brian Santo
In its recently completed third quarter, Comcast had healthy increases in VoIP subscribers and broadband subscribers, and it migrated more customers to the digital tier, all helping to lead to higher ARPU per basic subscriber and total revenue. But the company gained a modest number of basic subscribers, spent more on capital investments, took a charge associated with its integration of parts of Adelphia, and reported a profit of less than half what it was a year ago.
Comcast’s drop in profit and its warning that competition will take its toll on its upcoming Q4 financials seems to have triggered a sell-off. It’s always hard to tell what will spook investors – the entire market took a hit on some bad economic indicators, but the stocks of every major U.S. cable company were down after Comcast’s news (the major Canadian operators were up). The market had shaved nearly 10 percent off Comcast’s stock value as of mid-day. Charter got it worse.
In the quarter just completed, Comcast earned $560 million, down from $1.2 billion a year ago. Revenue was up from $6.4 billion in Q3 2006 to $7.7 billion in Q3 2007.
Comcast reported a drop of 65,000 in basic subscriber additions, but still had 24.1 million basic subscribers, essentially flat from a year ago. Digital subscribers jumped from 12.1 million a year ago to 14.6 million in Q3 ’07, however. Digital penetration is now just below 61 percent. Last year, Comcast had 18.5 million digital set-tops installed with subscribers; as of Q3 ’07, the company had 24.7 million in the field.
Comcast said 8 million, or 40 percent, of its digital cable subscribers take advanced services such as digital video recorders (DVR) and high-definition television (HDTV) compared to 4 million, or 33 percent, one year ago.
Average video revenue per subscriber is up almost $3 per, to $60.72, while average total revenue is up just over $10 per, to $102.24.
The company had 450,000 broadband subscriber adds, down from 538,000 a year ago, but a sequential increase from the 332,000 signed up in Q2 ’07.
Comcast also signed up 662,000 VoIP customers, almost matching its success from a year ago, when it attracted 673,000 new VoIP subs. In the past year, the company went from 1.3 million VoIP subs to 3.7 million. Meanwhile, the company is rapidly shedding its circuit-switched customers, and it intends to keep doing so. It was not clear from the company report how many circuit-switched customers are migrating to Comcast VoIP.
Looking ahead, Comcast said it expects a softening economy, and it expects increasing competition will have an effect on its upcoming Q4 results.
Capital expenditures increased 19 percent to $1.5 billion, compared to $1.3 billion a year ago.
Year-to-date cable capital expenditures increased 39 percent to $4.5 billion from $3.3 billion in the same period a year ago. Comcast said that reflects a 40 percent, or 1.4 million, increase in RGU additions and a 20 percent increase in the number of digital customers added with advanced digital services (HD and/or DVR service). Some of that also reflects investing in the upgrade of former Adelphia systems.
Comcast also authorized another $7 billion for stock buybacks.
C-Cor’s net income jumps more than 300 percent
By Traci Patterson
C-Cor Inc. - which was acquired by Arris last month for approximately $730 million - reported a net income of $4.9 million in Q1 2008, up 306 percent year-on-year from $1.6 million.
Income from continuing operations was $5.5 million, an increase of 250 percent compared with $2.2 million in the year-ago quarter. Net sales from continuing operations were $71.9 million, compared with $60.4 million in the year-ago quarter - an increase of 19 percent.
C-Cor's results for the quarter include $2.8 million of stock compensation expense; $1.2 million of transaction costs related to the proposed merger with Arris; $633,000 of amortization related to intangible assets; and $205,000 of restructuring charges.
The company expects net sales for Q2 2008 to be between $72 million and $76 million.
The projections include $1.1 million of stock compensation expense; $579,000 of amortization related to intangible assets; and approximately $150,000 of restructuring charges.
Motorola’s net income plunges in Q3
By Traci Patterson
Motorola Inc.’s net income plummeted 94 percent in Q3, from $968 million a year ago to $60 million in the July-to-September period.
Sales for the quarter were $8.8 million, down 17 percent from $10.6 million in the year-ago quarter. But the home and networks mobility segment increased 6 percent - from $2.3 billion a year ago to $2.4 billion.
During the quarter, the company acquired Leapstone Systems, which provides a unified platform for creating, managing and delivering converged video, voice and data service bundles across multiple networks and devices; Modulus Video, an expert in MPEG-4 AVC compression systems; and Terayon Communications, which creates video processing solutions that optimize bandwidth and enable content to be delivered based on the regional and local interest of viewers.
In the quarter, Motorola also shipped its two-millionth IPTV STB, just five months after shipping its millionth, and conducted the world’s first WiMAX 802.16e mobile handoff during the WiMAX World conference.
The mobile devices segment sales were $4.5 billion - down 36 percent year-on-year. The segment has been hurting for the past year as the popularity of the Razr phone dwindles. But the mobile segment is improving, the company said, and the outlook remains positive.
“We have strengthened our leadership position in broadband video, WiMAX, next-generation government and public safety, and the enterprise mobility market,” said Ed Zander, Motorola’s chairman and CEO.
Broadband Briefs for 10/25/07
* J:Com increases stake in Miyavision
By Brian Santo
Jupiter Telecommunications (J:Com) will buy 39,798 outstanding shares in Kyoto Cable Communications (Miyavision) from Fujitsu Ltd. effective at the end of November. This transfer will make J:Com the largest shareholder in the company, with a 46.64 percent share of the voting rights. J:Com will continue buying Miyavision until it holds a majority stake, the company said.
Miyavision has approximately 303,000 homes passed.
* Procera deploys PacketLogic with Norwegian operator
By Brian Santo
Procera Networks said StarNordic AS, a triple-play provider in Norway, has deployed Procera's PacketLogic platform to ensure quality of service (QoS) and provide advanced bandwidth management capabilities across its fiber-optic network. Procera partner Fiberdata, a Scandinavian systems integrator, provided StarNordic with consultation, design and installation expertise for this first deployment of PacketLogic in Norway.
* SeaChange approves Ixia’s IPTV test solution
By Traci Patterson
Ixia’s IPTV test solution, IxLoad, has been certified for compatibility with SeaChange International’s video servers. Ixia's Optixia XM12 chassis and XMV16 load module, combined with IxLoad, create the company's 10 gigabit Ethernet (GbE) offering. It is the first test solution on a single blade to emulate line-rate, real-world 1 GbE and 10 GbE traffic, the company said.