Shares of
Comcast (
CMSCA) rose over 3% Wednesday after the world's largest cable company, which has never been a Wall Street favorite, reported
better-than-expected results and told investors that the company wouldn't lose money on the Olympics as expected.
Net income at the
Philadelphia company climbed 32% to $1.35 billion, or 50 cents a share, from $1.02 billion, or 37 cents a share, a year earlier as gains in broadband subscribers helped offset declines at NBC Universal. Revenue rose 6% to $14.33 billion, in-line with analysts' expectations. Analysts surveyed by
Bloomberg News expected a profit of 48 cents a share.
There was plenty of good news in the report. For instance, cable revenue surged 6% to $9.3 billion, fueled by growth in its business services and high-speed Internet operations. Monthly average total revenue per video customer rose 8% to $148.57, as more residential customers took multiple products.
Comcast lost 176,000 video customers in the quarter, an improvement from the 238,000 decline in the year-ago period. The company gained 156,000 high-speed Internet customers, up from 144,000, while its 158,000 gain in voice customers lagged the 193,000 increase in the earlier quarter. Bundles of services (voice, video and high-speed Internet) attracted 138,000 customers in the quarter, up from a 99,000 gain in 2011. These figures surpassed analysts' forecasts.
Chief Operating Officer Steve Burke told investors on the earnings conference call that the company expected to break-even on the 2012 games, thanks to unexpectedly strong ratings and
better-than-expected advertising sales. Earlier, the company had projected a loss of about $200 million. Wall Street analysts are concerned that Comcast's NBC Universal might lose money on the $4.38 billion deal it recently signed to broadcast the next four Olympics, given
the network's history of losing money on the games.
NBC Universal's results were otherwise mediocre. Revenue at the Media and Entertainment business fell 0.8%, as a new content licensing agreement wasn't able to offset the underperformance in the Filmed Entertainment business. Operating free cash flow plunged 15.4% to $982 million, reflecting higher costs for NBA and NHL programming. Revenue at the Broadcast Television and Filmed Entertainment businesses fell. Cable Networks and Theme Parks posted gains of about 3%. The Filmed Entertainment business posted a loss of $83 million.
Wall Street doesn't think the good times are over yet at Comcast. Analysts have an average 52-week price target of $34.92 on the stock, about 4% above where it currently trades. The shares are expensive, trading at a price-to-earnings ratio of 20.21, near its five-year high,
according to Reuters.
Investors, though, have underestimated Comcast before and will probably do so again.
Jonathan Berr does not own shares of the stocks listed here. Follow him on Twitter@jdberr.
