Comcast sees high-speed profits

The cable company's fourth-quarter earnings see a surprising jump.

By Benzinga Feb 15, 2012 6:43PM

Image: Watching television (© Corbis)By Brett Callwood, Benzinga Staff Writer

Comcast (CMCSA) said Wednesday that fourth-quarter profits shot up 26%, largely due to growth in its broadband and business-services divisions. The cable provider also said that it had curbed defections of pay-TV subscribers for the fifth quarter in a row.

The company announced a 44% dividend increase and a $6.5 billion share buyback program.

The numbers make for fascinating reading. Comcast reported a profit of $1.29 billion for the fourth quarter, higher than the $1.02 billion earned a year earlier. Earnings rose to 47 cents per share from 36 cents, beating the 41 cents analysts expected.

Revenue increased 55% to $15.04 billion, or 3% on a pro-forma basis after accounting for Comcast's acquisition of NBC Universal. That beat analyst expectations of $14.87 billion. Within NBC Universal, revenue increased by less than 1%, and cash flow fell by 6.8%.

Taking the costs of all deals into account, operating cash flow increased 3.5%. About 80% of that comes from Comcast's cable-distribution division.

The numbers are all the more impressive when considering that Comcast, along with most cable providers, have struggled recently in the slowdown in the traditional cable business combined with a weak housing market. Fewer people were moving or relocating in the economic downturn, leading to a drop in new service calls.

Comcast saw video-subscriber losses slow in the fourth quarter to 17,000, an 87% improvement from the previous year. Apparently, Comcast's marketing campaigns are paying off. In addition, the provider added 336,000 high-speed Internet customers in the fourth quarter -- 15% more than it added a year earlier.

There were also 146,000 new telephone subscribers, although that increase is 43% less than 2011. Of course, telephone subscriptions are going to fall in this cell phone age. Many people don't have landlines in their homes 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 noted Comcast's impressive video-subscriber performance and cable revenue, and said the 2012 return-of-capital plan is at the upper end of its $4 billion to $5 billion estimate range.

Another analyst firm, Miller Tabak & Co., said that the revenue misses at Comcast's cable and NBC Universal arms were more than offset by margin expansion, free-cash-flow conversion, a larger-than-expected dividend increase and a new $6.5 billion stock buyback plan.

More from Benzinga:
Feb 16, 2012 11:05AM
Nice to see that companies are finally starting to see better than expected returns again. Maybe this is finally a sign that the economy is starting to recover.

Not sure that I would have expected this from comcast, though, so this makes me wonder if other companies are just failing at a faster rate and comcast has been good in picking up the slack, or if the economy really is improving. 
Feb 16, 2012 11:43AM
All my friends who have Comcast are very critical of the service. We do need more choice and hopefully Apple, Amazon and others will break the cable monopolies and force better service and pricing.
Feb 16, 2012 11:20AM
It'll be interesting to see how Comcast does moving forward. With cell phones taking over landlines and companies like Netflix and Hulu packaging TV in an easy-to-access-from-anywhere bundle, Comcast will have to do a lot more than launch a new marketing campaign to see increasing profits moving forward . 
Feb 16, 2012 11:17AM
I can't imagine more people will be taking up cable subscriptions, but I could see greater demand for FIOS and hi-speed internet changing the landscape of content delivery. If I were Comcast, I'd bet on broadband by expanding its infrastructure in that direction. Traditional cable, OTOH, is surely doomed.
Feb 16, 2012 11:17AM
Eddie Staley -- if Apple brings cable through the Internet, Comcast will just charge more for broadband to make up for the loss. So we'll pay at least as much money no matter what, and likely more in the long run with a less stable service.

The only solution is for Apple to buy a cable company, a broadband company, or launch an entirely new way to deliver video that does not need cable or the Internet.
Feb 16, 2012 11:17AM
Feb 16, 2012 11:14AM
Oh sure, they're high-speed profits alright. (Or is it "all right"? I can never tell.) But those profits were brought in at the cost of the consumer, who has to pay ridiculously high monthly fees. The dastardly data caps will ensure that consumers continue to pay more -- and incur penalties -- as additional streaming video options become available.

I guess you could say that's "Comcastic
Feb 16, 2012 11:14AM
yah, no surprise here given how much they charge for business service that is really no different then their consumer access. 
Feb 16, 2012 11:14AM
I would choose on demand content over channel surfing any day, just wish comcast would make their media packages more affordable.
Feb 16, 2012 11:11AM
Great company, just wish there service was more affordable, I guess that's why it did so well!
Feb 16, 2012 11:11AM
I hope Apple really does have a plan to offer a streaming cable service through the internet. That would be tremendous. Comcast has had a monopoly for far too long and the service they offer is terrible.
Feb 16, 2012 11:08AM
Yes, but how long till the company throttles our internet data speeds when it finds out people are ignoring their cable programming for online content? 
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