Comcast’s Internet Grows While Cable Stalls

The nation’s largest broadband providers may worry about the future but for the moment, Comcast, the nation’s largest cable company, continues earning money and adding customers.

Comcast (NASDAQ: CMCSA, CMCSK) today reported first-quarter earnings of $0.27 per share, beating estimates of $0.23 per share according to Thomson Reuters. The company’s broadband and digital phone businesses are growing even though cable viewers fell slightly. The stock was surging at press time, at $16.06, up $0.82 or 5.38 percent.

“Our results for the first quarter mark a solid start to 2009, demonstrating the underlying strength of our subscription businesses and our ability to continue to manage effectively in a challenging environment,” Comcast chairman and CEO Brian Roberts said in a statement.

Management is focused on cash. “We achieved significant free cash flow growth, driven by lower capital expenditures and healthy growth across key metrics including revenues and operating cash flow,” he said.

As in Q1 2008, the company reduced maintenance in Q1 2009, spending $261 million, which is a little more than half of the average quarterly maintenance costs.

The company reported cash on hand of $1.9 billion, up sharply from $1.2 billion at the end of the year. Comcast also managed to repay or buy back $352 million of debt, although it still has $2.6 billion of current long term debt and $29.4 billion additional long term debt.

Total assets are $113 billion, making Comcast’s debt seem manageable, especially in comparison to its smaller competitors Charter and Cablevision, whose debt is greater than assets (Charter is in Chapter 11 bankruptcy).


The company’s Comcast Digital Voice service continues to experience rapid growth. Customers increased to 6,769,000, up from 6,460,000 at the end of the year and from 5,088,000 a year ago. In March, the company reported that it is now the third largest residential phone provider in the U.S.

Its broadband customers increased to 15,258,000, up from 14,929,000 at the end of the year. Penetration is now at 30.2 percent of potential Comcast broadband subscribers, it said.

While the company’s new businesses are doing well, its old businesses showed some weakness. Cable customers decreased slightly to 24,104,000 from 24,182,000 at the end of the year. Advertising revenue fell sharply to $262 million, down from $346 million in Q1 2008 and $416 million in Q4 2008, although those figures are skewed somewhat by the fact that the end of the year is always a good time for advertising.

Competition between cable and phone companies may be heating up with the introduction of DOCSIS 3.0 technology, which allows cable companies to offer higher speeds to customers. This week, Cablevision introduced its 101 Mbps tier, the fastest in the U.S.

Last month, Comcast began testing a 50 Mbps offering in the Bay Area. “Wideband, combined with our fiber-optic network, gives us the capability of meeting the needs of our customers for many years to come by offering even faster speeds in the future,” said Steve White, senior vice president of
Comcast’s California Region.

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