Comcast’s Pro Forma Growth

On paper, it looks like Comcast had a good first quarter in 2002, with a
pro forma revenue increase of 12 percent and pro forma operating cash flow
growth of 18.3 percent, for a reported $2.673 billion in consolidated
revenues, officials announced Wednesday.

But the company posted a net loss of $88.9 million for the quarter compared
to the net income of more than $1 billion at this time last year.

Brian Roberts, Comcast Corp president, said the numbers
were in line to meet the company’s stated year-end projections for 2002.

“The cable division reported one of its best quarters ever, accelerating
revenue and operating cash flow growth and delivering new digital and high-
speed Internet customers, even as we completed the huge task of
transitioning almost one million customers to our new high-speed Internet
service,” he said.

It’s been a busy quarter for the third-largest cable operator in the U.S.,
with the completion of its @Home migration and a bid
to take over
AT&T Broadband , the largest cable network
in the nation.

The true costs of these efforts (i.e., pro forma), as well as various and
other sundry acquisitions to grow its cable holdings, are usually not
reported. Pro forma results normally exclude one-time costs, like the very
real expense of equipment write-downs and acquisition costs.

In this case it seems the cable company just can’t catch up with its rate
of growth, resulting in the company reporting numbers from operations it
acquired in June of 2001 but not those acquired afterwards.

Also, the company had to deal with the migration
of 950,000 customers from @Home, which involved a huge one-time expense of
routers and other networking equipment — as well as backoffice support —
to get a viable, nationwide broadband Internet service provider (ISP)
outfit running.

To its credit, Comcast included in this quarter’s report the depreciation
and amortization costs of $734.7 million and tax expenses of $485.6 million
— the TDA in the earnings before interest, taxes, depreciation and
amortization (EBITDA) — and other charges resulting from dabbling in stocks.

Outside the financial numbers, Comcast continues to shine, reporting the
pro forma growth of its high-speed cable Internet service to 1.041 million
customers, a pro forma increase of 81 percent over 2001 levels.

In this case, pro forma numbers “assume that all acquisitions were
effective on Jan. 1, 2001,” Comcast’s financial report stated.

With 92,4000 new high-speed customers in the first quarter, Comcast’s
expansion plans continue apace. With more than 81 percent of the homes in
the Comcast network eligible for broadband services, it’s achieved a
penetration rate of nine percent.

Comcast’s cable division accounts for a lion’s share of the company’s many
revenues sources (which include QVC commerce and channels like the E!
Network and The Golf Channel), and will only grow more as it gets closer
and closer to a possible AT&T Broadband buyout.

“We are more excited than ever about the opportunities for growth in the
cable business and look forward to completing our merger with AT&T
Broadband,” Roberts said. “We believe our strong track record of operating
performance, successful system integration and balance sheet strength will
help support accelerated growth rates and provide a whole new range of
opportunities for the new company.”

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