While Comcast’s stock has bounced up and down during the current economic slowdown, the nation’s largest cable operator reported solid third-quarter results this morning.
Despite losing more basic video subscribers, Comcast said its third-quarter profit increased 38 percent, as the company cut back on its capital spending and added Internet and digital phone customers.
For the quarter that ended Sept. 30, Comcast’s revenue was up 10 percent, to $8.55 billion, while its operating cash flow also increased 10 percent, to $3.2 billion. Comcast earned $771 million, or 26 cents per share, compared with $560 million, or 18 cents per share, a year ago.
According to a Thomson Reuters poll, analysts had expected a 22 cents-per-share profit on revenue of $8.59 billion.
The company’s capital spending fell 14 percent, to $1.3 billion, while its free cash flow increased by 77 percent, to $928 million.
|Comcast CEO Brian Roberts|
“We delivered solid results in the third quarter, demonstrating the underlying strength of our subscription businesses and our ability to operate well in a challenging economic and competitive environment,” said Comcast CEO Brian Roberts. “Importantly, our financial position has never been stronger, reflecting disciplined and prudent balance sheet management and strong free cash flow growth.
“The success of our financial strategy enables us to grow the business, compete effectively, and invest in our products and services. We will continue to apply this balanced approach to the business, as we remain focused on improving the customer experience and extending our long-term competitive advantage in order to build shareholder value.”
Earlier this year, Roberts said that Comcast would have DOCSIS 3.0 technology in at least 20 percent of its nationwide footprint by the end of this year.
Comcast’s basic video subscribers declined by 147,000, or 0.6 percent, sequentially during the third quarter, but it added 417,000 digital cable subscribers. Comcast lost 15,000 basic subscribers due to hurricanes Ike and Gustav.
With the new digital additions, 69 percent, or 16.8 million, of Comcast’s video subscribers are signed up for digital tiers. Of those digital subscribers, 7.3 million, or 44 percent, have advanced services such as digital video recorders (DVRs) and/or high-definition television (HDTV) service.
Comcast’s video revenue increased 4 percent, to $4.7 billion, in the third quarter of 2008, from $4.5 billion in 2007. Comcast said the revenue increase reflects price increases for video services and growth in digital video customers, offset in part by an increasing number of customers in bundles and promotional offers, as well as the decline in basic video customers.
Year to date through Sept. 30, basic subscribers decreased 342,000, which Comcast said reflected “a more challenging competitive and economic environment.”
On the broadband side of the business, Comcast added 382,000 high-speed Internet subscribers during the third quarter, as its penetration reached 30 percent of homes passed.
High-speed Internet revenue increased 9 percent, to $1.8 billion, in the third quarter of 2008, from $1.7 billion in 2007, reflecting an 11 percent increase in subscribers and a 2 percent decline in average monthly revenue per subscriber to $41.74. Comcast said the decline was the result of additional bundling and the recent introduction of new offers and speed tiers.
Comcast added 483,000 digital phone customers during the third quarter, as penetration reached 13 percent of homes passed, or 6.1 million customers.
Phone revenue increased 44 percent, from $479 million to $690 million, in the third quarter of 2008, reflecting significant growth in digital phone subscribers and a 5 percent decrease in average revenue per subscriber to $38.98, resulting from an increase in the number of customers receiving service as part of a promotional offer or in a new product package.
The increase in digital phone revenue was partially offset by a $49 million, or 96 percent, decline in circuit-switched phone revenue as Comcast exits that technology in favor of VoIP.
Year to date, phone revenue increased 52 percent from $1.3 billion to $1.9 billion, which was partially offset by a $182 million decline in circuit-switched phone revenue.
Comcast said its advertising revenue decreased 10 percent, to $374 million, in the third quarter of 2008, from $417 million in 2007, partially due to one less week in the broadcast advertising calendar, as well “as continued softness in the advertising marketplace, only partially offset by an increase in political advertising.” Year to date, ad sales decreased 3 percent, to $1.1 billion.
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