Comcast, the nation’s largest cable operator, posted a 54 percent increase in fourth-quarter profits this morning and announced that it will start paying out a shareholder dividend in April.
Comcast’s fourth-quarter net profit increased to $602 million, or 20 cents per share, from $390 million, or 13 cents per share, a year earlier. The company beat Wall Street’s fourth-quarter forecast by 2 cents per share, which led to Comcast’s shares increasing by 8 percent compared with yesterday’s closing price in late morning trading.
Comcast shareholders have clamored for the Philadelphia-based company to pay out a dividend, which Comcast Chairman and CEO Brian Roberts said today will be a 25 cent quarterly dividend starting at the end of April.
“In addition, we are announcing our intent to fully utilize our remaining $6.9 billion share repurchase authorization by the end of 2009,” Roberts said. “Taken together, we believe these actions underscore our strong confidence in the cash flow generation of our business and our continued commitment to returning capital and building shareholder value."
In the fourth quarter, Comcast repurchased $1.3 billion worth of its stock, compared with almost $447 million in the same time frame a year ago. Comcast has long felt that its stock has been undervalued on Wall Street, as the company’s shares lost more than one third of their value since a high in July.
Operating cash flow in the fourth quarter was $3.1 billion, up 19 percent year-over-year, while the company’s cash flow tripled to more than $1 billion. Comcast added 1.2 million revenue generating units (RGUs), which was down from 2006’s 1.6 million.
Comcast posted a 2 percent profit of $2.6 billion for the year, as revenue increased by 24 percent to $30.9 billion.
In late December, Comcast predicted that its basic subscriber numbers would continue to dwindle, which was borne out in today’s earnings report. Faced with increased competition from telco and satellite providers, Comcast’s basic subscribers decreased by 94,000 in the fourth quarter, compared with an increase of 111,000 in 2006.
The company’s digital video customers also slowed down in the fourth quarter; Comcast added 523,000 in the recently completed fourth quarter, compared with 614,000 in the prior year’s quarter.
Video revenue in the quarter rose by 6 percent, to $4.5 billion, as customers’ demand increased for advanced digital services such as high-definition (HD) and digital video recorders (DVRs). Comcast’s VOD offerings increased the company’s coffers by 23 percent, to $197 million, in the quarter.
Comcast’s broadband revenues increased by 14 percent in the quarter, to $1.7 billion. The growth included the addition of 331,000 broadband subscribers, but that was less than the 490,000 that signed on in the same time frame in 2006.
On the telephony side of the ledger, Comcast’s phone revenues increased 73 percent in the fourth quarter, to $523 million, which the company said reflected the addition of 604,000 digital voice customers, compared with 510,000 in Q4 2006. The average cost per digital voice customer dropped from $43.05 per month to $40.34 per month. Comcast’s circuit-switched unit lost 128,000 customers.
Comcast’s capital expenditures of $1.5 billion were 7 percent higher than in the fourth quarter of 2006.
"In 2007, we delivered very healthy growth in revenue and operating cash flow, added substantial revenue generating units and generated significant earnings growth – despite a weak economy and intensified competition in the second half of the year,” Roberts said. “Our goal continues to be to deliver consistent, profitable growth that builds long-term shareholder value. For 2008, we are confident about our competitive position and our ability to further grow our business, as illustrated by our outlook for 2008 free cash flow growth of at least 20 percent.”
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