Cable services provider Comcast Corp. (CMCSA, CMCSK) on Wednesday reported a 22% increase in profit for the third quarter from last year, helped by an increase in revenues and lower capital spending during the quarter. However, the company reported slower customer growth in the latest quarter compared to the same period last year, although results were an improvement over the preceding second quarter. Meanwhile, the company did not make any announcement on whether it will be acquiring a majority stake in General Electric Co.'s (GE) NBC Universal.
Third-Quarter Results
The Philadelphia, Pennsylvania-based company reported that net income attributable to the company for the third quarter increased to $944 million, or $0.33 per share, from $771 million, or $0.26 per share, in the year-ago quarter.
The results for the latest quarter include the recognition of income tax benefits of $251 million or $0.09 per share, partially offset by $113 million or $0.04 per share in one-time financing expenses. The year-ago quarter's results include income tax benefits of $80 million or $0.03 per share.
Excluding items, earnings per share for the latest quarter would have grown 21.7% over the prior-year period. On average, twenty five analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter increased 3% to $8.80 billion from $8.55 billion in the prior-year quarter, but missed analysts' consensus revenue estimate for the quarter of $8.85billion.
Brian Roberts, Chairman and Chief Executive Officer of Comcast Corp. said, "The strength and resilience of our businesses combined with our continued emphasis on expenses and prudent capital management helped us achieve healthy operating and financial results in the third quarter. We continued to execute well, maintaining our focus on balancing revenue, cash flow and customer growth while at the same time investing in attractive businesses like Comcast Business Services. We also made real progress on initiatives like Wideband and All-Digital that strengthen our competitive position now and in the future."
Peer Performance
Cable service providers have been hit as consumers scale back on expenditures, including landline phone service and pricey premium service packages, amid the economic slowdown. The continued weakness in the housing market has also become a drag on the ability of these companies to find new customers. In addition, they face increased competition from telecommunication service providers that offer rival services in more markets.
Among Comcast's rivals, DIRECTV Group Inc. (DTV) is scheduled to release its third-quarter results on November 5, with analysts forecasting earnings of $0.39 per share on revenues of $5.42 billion.
Another peer, Dish Network Corp. (DISH) will announce financial results for its third quarter on November 9. Analysts expect the company to report earnings of $0.46 per share on revenues of $2.93 billion for the quarter.
Other Metrics
Operating income for the quarter increased 2.4% to $1.71 billion from $1.67 billion in the year-ago period, helped by strong results at the company's operating segments.
Consolidated capital expenditures for the third quarter decreased 6.1% from the year-ago quarter to $1.2 billion, reflecting a decreased level of capital intensity at Comcast Cable.
Comcast's operating cash flow for the quarter increased 2.7% to $3.33 billion from $3.24 billion in the previous-year quarter.
Free cash flow for the quarter, excluding any impact from the economic stimulus packages, increased 19.8% from the year-ago period to $1.1 billion, reflecting growth in consolidated operating cash flow and lower capital expenditures.
Segmental Results
Comcast cable revenue for the quarter increased 2.8% to $8.36 billion from $8.13 billion in the same quarter last year, reflecting continued growth in high-speed Internet, Comcast Digital Voice and Comcast Business Services, partially offset by lower advertising revenue. The monthly average total revenue per video customer increased 5.6% from the prior-year period to $116.91, reflecting an increasing number of customers taking multiple products and a higher contribution from Comcast Business Services.
Programming segment revenues for the quarter were $383 million, up 10.3% from $347 million in the prior-year quarter. The increase in revenues reflect higher affiliate and advertising revenue. Operating cash flow increased 12.5% from the year-ago period to $118 million, reflecting the impact of timing of certain marketing and programming expenses that are expected to be incurred in the fourth quarter.
Corporate and other revenues for the quarter declined 10.7% to $63 million from $71 million a year earlier.
As of September 30, 2009, Comcast's video, high-speed Internet and voice customers totaled 46.8 million, up 3.7% from a year ago. Of this, voice customers increased 20.3% from last year to 7.38 million and high-speed Internet customers increased 6.4% to 15.68 million. Video customers, however, declined 2.7% to 23.76 million. Digital video customers as at the end of the quarter totaled 18.01 million, up 7.4% from a year ago.
The company added 375 thousand voice customers and 361 thousand high-speed Internet customers during the latest quarter, while video subscribers declined by 132 thousand. The company added 1.07 million revenue generating units in the latest quarter.
During the third quarter, Comcast repurchased 16.1 million of its common shares for $250 million. As of September 30, 2009, the company had approximately $3.6 billion of availability remaining under its share repurchase authorization.
Year-To-Date Results
For the first nine months of fiscal year 2009, net income attributable to Comcast increased to $2.68 billion or $0.93 per share from $2.14 billion or $0.72 per share in the prior-year period.
Excluding items, earnings per share for the nine-month period would have increased 26.6% over the comparable period in the prior year.
Consolidated revenue for the period increased 4.3% to $26.58 billion from $25.49 billion in the year-ago period.
Dividend
In a separate press release, Comcast said that its board of directors declared a quarterly dividend of $0.0675 a share on the company's common stock. The quarterly dividend is payable on January 27, 2010 to shareholders of record as of the close of business on January 6, 2010.
The company noted that during the first ten months of 2009, it has paid four cash dividends totaling $761 million.
Other Developments
Comcast is reportedly in talks to acquire a 51% stake in NBC Universal from General Electric Co. (GE) at three-and-a-half year and seven-year intervals. NBC Universal owns the NBC television network, Telemundo, Universal Studios theme parks and the Universal Pictures movie studio, as well as the cable networks Bravo, USA and CNBC. News Corp. (NWS) and Liberty Media Corp. (LINTA) are also reportedly interested in NBC Universal, though neither company has approached GE so far.
However, the company did not make any announcement on Wednesday whether it will be acquiring a stake in NBC Universal.
Stock Quotes
CMCSA, which has been trading between $11.10 and $18.10 in the past 52 weeks, closed Tuesday's trading session at $14.51, on a volume of 26.4 million shares. In Wednesday's pre-market trading, the stock is trading at $14.80, up $0.29 or 2.00%.
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