Comcast earnings: Optimism abounds
Comcast oozed optimism during this morning's earnings conference call, and with good reason based on its financial results from the fourth quarter and all of last year, which were driven by increased revenues in advertising, triple-play services and business services.
The nation's largest cable operator reported a 7 percent increase, to $9.7 billion, in fourth quarter consolidated revenues, while its operating cash flow increased 9 percent to $3.7 billion. Comcast's operating income increased 11 percent to $2 billion.
For the full year, revenue increased 6.1 percent to $37.9 billion, operating cash flow increased 6.4 percent to $14.6 billion and operating income increased 10.6 percent to $8 billion. Excluding $80 million of NBCUniversal-related transaction costs in 2010 and $20 million in 2009, Comcast's operating cash flow increased 7 percent.
"I'm delighted to begin this first call of the year with really only positive news," Comcast Chairman and CEO Brian Roberts said at the start of the conference call. "Today we're reporting strong results for 2010, we've successfully completed the NBCUniversal transaction, and really everything you hear on this call points toward an exciting new beginning for our company."
Roberts announced that Comcast would increase its annual dividend by 19 percent, from 37.8 cents per share to 45 cents per share, and that it would accelerate its stock repurchase initiative by buying back $2.1 billion worth of stock this year instead of completing the buyback next year.
Comcast's fourth-quarter and full-year earnings didn't reflect NBCUniversal's results, but those results will be included in its first-quarter earnings report.
Even the loss of 135,000 video customers didn't dampen Comcast's spirits, since that number was an improvement over the 199,000 losses from the same quarter a year ago. Comcast finished the year with 22.8 million video customers despite facing more competition in its footprint than a year ago.
Comcast and other cable operators have attributed the loss of basic video subscribers to the economy and promotional pricing by competitors, but without mentioning cord-cutting, Comcast chief financial officer Michael Angelakis said the impact of the network digital transition "is now behind us," which could mean Comcast's subscriber losses will level out over the coming quarters.
Comcast's total revenue per video customer increased 10.6 percent to $133 per month, driven by the addition of 228,000 advanced service customers who signed up for HD and/or DVR services. Comcast now has 10.1 million advanced service customers, which is equal to 51 percent of its digital customer base and 44 percent of all of its video customers.
At the end of the fourth quarter, 33 percent of Comcast's video customers took all three of its triple-play services, compared with 28 percent at the end of 2009.
Comcast's high-speed Internet revenue increased 10.7 percent, due largely to rate increases and more subscribers opting for faster data tiers. Comcast, the nation's largest ISP, added 292,000 data customers versus 247,000 in the same quarter a year ago. For the year, Comcast added 1.1 million data subscribers, compared with 1 million in 2009.
Voice and business services
The company's voice revenues increased 11.8 percent in the quarter. Comcast added 257,000 voice subscribers in the fourth quarter, compared with 243,000 in the same quarter a year ago.
"We also had another strong performance in business services, with revenue increasing 53.5 percent to 356 million in the quarter and 53.1 percent to 1.3 billion for the year," Angelakis said.
Angelakis said Comcast was enthusiastic about its growth efforts for targeting medium-size businesses, as well as expanding its cellular back efforts.
Comcast's ad revenue increased 29.3 percent, thanks to more automotive and political ad spending last year, but even with the exclusion of the political ads, revenues increased 10.2 percent.
"So we really do start 2011 on a positive note," Roberts said. "We have a strong foundation with increasingly diverse revenue streams, a strong subscription business and opportunities to build new business, and our competitive position has never been better. Now it's really all about execution in order to maintain our financial and operating momentum and to drive profitable and sustainable growth."
Other items of note from the conference call included:
- Roberts said Comcast's all-digital project was completed in 75 percent of the company's markets, while DOCSIS 3.0 tiers are now deployed in more than 85 percent of its footprint.
- Comcast has installed its content delivery network, which includes its on-demand library, in the majority of its markets.
- Under the direction of Comcast Cable President Neil Smit, Roberts said repeat customer service calls were down 15 percent, while online transactions increased 20 percent.
"Customer awareness of our customer guarantee increased by 10 points last year," Roberts said. "When taken together, all of these steps are driving higher customer satisfaction, as well as increased efficiencies in our cable businesses."