Comcast Sees High-Speed Profits

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Comcast
CMCSA
announced that its fourth quarter profits shot up 26 percent thanks to growth of its broadband and business-services divisions. CMCSA also said that it had curbed defections of the company‘s pay-TV subscribers for the fifth quarter in succession. In addition, Comcast, based in Philadelphia, announced a 44 percent increase in dividend and $6.5 billion stock-repurchase program. The numbers make for fascinating reading. CMCSA reported a profit of $1.29 billion for the fourth quarter. One year prior, Comcast reported a profit of $1.02 billion. Earnings rose from 36 cents to 47 cents per share. Analysts had expected 41 cents per share. According to the
Wall Street Journal
, total revenue increased 55 percent to $15.04 billion, or 3 percent after accounting for the deal with NBC. That top-line number beat analyst's expectations of $14.87 billion. Over at NBC Universal, revenue increased by less that 1 percent, and cash flow fell by 6.8 percent. With all said and done, taking the costs of all deals into account, operating cash flow increased 3.5 percent. 80 percent of that comes from CMCSA's cable-distribution division. The numbers are all the more impressive when considering the fact that Comcast, and all of the cable providers in fact, have struggled recently thanks to a slowdown in the traditional cable business as well as a weak housing market. If people are moving house less, if fewer customers are relocating, then there is less call for a new cable service to be installed. Comcast saw its video-subscriber losses slow down in the fourth quarter to 17,000, an 87 percent improvement from the previous year. Apparently, Comcast's marketing campaigns are paying off. In addition, CMCSA was able to add 336,000 high-speed internet customers in 4Q, 15 percent more than it added in 2011. There was also 146,000 new telephone subscribers, although that increase is 43 percent less than 2011. Of course, telephone subscriptions are going to fall. It stands to reason that, in this cell phone age, those numbers are going to continue to decline. Many people nowadays don't have a landline in their home at all. So the fact that CMCSA managed to pull in that many new landline subscribers is impressive. In a Wednesday research report, Deutsche Bank said that Comcast reported 4Q numbers ahead of its expectations noting impressive video sub performance and cable revenue, cable EBITDA, cable capex, NBCU revenue, NBCU EBITDA, EPS and FCF that beat estimates, while the 2012 return of capital plan is at the upper end of DB's $4b-$5b estimate range. “Clearly, 2012 guidance is critical and mgmt will likely try to hold back the Street as much as they can (we would expect flat cable margins, flat capex, NBCU commentary to be restrained given NBA benefit in 4Q hurts 1H12 and poor primetime ratings at NBC, partially offset by The Voice, the decision on the purchase price acctg adj. for the Olympics and NFL).” Miller Tabak & Co said that Comcast posted a very strong 4Q11 report, with a revenue miss at Cable and NBC Universal more than offset by margin expansion, free cash flow conversion, and a larger-than-expected +44% dividend increase to $0.65/year and new $6.5 billion stock buyback authorization, with $3 billion planned for 2012 (above its $2 billion expectation). Meanwhile, J.P. Morgan said that consolidated revenue of $15.04 billion was better than consensus at $14.94 billion and EBITDA of $4.92 billion was above its $4.65 billion and Street at $4.76 billion, on margin of 32.7 percent vs. its 32.3 percent. EPS came in at $0.47 vs. Street $0.41. FCF of $1.9 billion was in-line.
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Posted In: EarningsNewsAnalyst RatingsTech
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