Comcast's earnings soar, boost stock

Posted: August 02, 2013

Steady growth in broadband subscribers. Innovative technology for delivering television and WiFi. Boffo box office from films such as Universal Pictures' Fast and Furious 6, and high notes in the Nielsens from TV shows such as NBC's The Voice.

Comcast Corp. wowed Wall Street on Wednesday with strong quarterly results that beat analysts' expectations. Executives of the Philadelphia-based cable giant, which employs about 6,000 people in the city, were plainly pleased with their decision to complete the takeover of NBCUniversal this spring, saying it helped position the company to grow in a variety of directions.

"It's one of the most exciting quarters because it's not one thing, it's across the board," chairman and chief executive officer Brian L. Roberts said in an interview after Comcast announced an 11.6 percent jump in operating income and a 7 percent rise in revenue. "This quarter, it kind of all came together."

The markets appeared to agree. Comcast's shares closed at $45.08, up $2.37 or 5.55 percent from Tuesday's close.

Leading Comcast's performance for the quarter ended June 30 were strong showings from its Xfinity Internet, TV and film, and business services - a segment that leverages Comcast's technology by targeting video, voice, Internet, and other fiber-optic services to smaller companies. That segment generated $788 million for the quarter, up 26.4 percent from a year ago.

Overall, Comcast reported quarterly revenue of $16.3 billion, up from $15.2 billion in the same period in 2012. Net income rose 28.6 percent from a year earlier, to $1.7 billion, and to 65 cents per share vs. 50 cents a year earlier.

In the earnings announcement, Roberts said the company was building on "a fantastic combination of cable and content businesses with many opportunities ahead."

Analysts such as Matthew Harrigan of Wunderlich Securities echoed the superlatives. "I think the company's just in a fabulous position," he said.

Harrigan said Comcast's position was bolstered by the $16.7 billion price it paid for General Electric's remaining 49 percent stake in NBCUniversal after buying a controlling interest two years before.

"I was frankly puzzled that GE exited its position at the price that it did," Harrigan said. "I think Comcast got a great deal."

If it was a bargain, that became clearer as the quarter drew to a close. Fast and Furious 6 grossed more than $314 million - a record for Universal Pictures - over its Memorial Day opening weekend in the United States and abroad. In mid-June, The Voice closed the prime-time season in third place in Nielsen's ratings for the coveted 18- to 49-year-old segment.

Although entertainment is notoriously volatile, NBC also started the current quarter strong. Despicable Me 2 took in $142 million over its July Fourth opening weekend. Roberts told analysts that the animated comedy would likely "end up being the most profitable film in the 100-year history of Universal."

Film was NBC's strongest segment for the second quarter, with revenues rising 12.8 percent, to $1.4 billion. Broadcast revenues rose 11.6 percent, to $1.7 billion.

Success in entertainment helped offset losses and weaker growth in Comcast's video and voice segments, which face pressures from competitors such as AT&T, Verizon, and Netflix, the video-streaming company.

Although Comcast continued to lose cable-TV customers during the quarter, the bleeding slowed. It dropped a net of 159,000, fewer than the 176,000 it lost a year earlier and less than 1 percent of its 21.8 million total.

Rate increases and sales of extra services lessened the impact. Comcast said average revenue per video customer rose 7.4 percent for the quarter, to about $160 per month. That was up from $149 a year ago and up more than 25 percent from 2010's average monthly revenue of $127.

The decline was also offset by growth in high-speed Internet and phone service. Comcast added 187,000 broadband Internet customers for the quarter, 20.1 percent more than it added a year earlier, giving it nearly 20 million subscribers in 39 states and Washington, D.C.

Comcast's capital investments rose 17.1 percent for the quarter, to $1.5 billion, reflecting upgrades on digital equipment as well as investment in new segments such as its Universal theme parks.

Roberts said such investments can pay off and show benefits from the company's intertwined businesses. For instance, attendance at Universal Orlando rose 40 percent after the launch of its Harry Potter-based attraction.

Roberts said one of the benefits of Comcast's growing scale was the ability to take more risks - "to make investments even knowing that some of them might not take off," he said. But Roberts clearly doesn't want to stray in every dimension from Comcast's roots. "We really want to be a company that is regarded as focused and consistent," he said.

That's how Kevin Werbach, a technology expert at the University of Pennsylvania's Wharton School, sees Comcast: "an extremely well-run company" that has proved its ability to buy and operate media businesses.

"It's been able to acquire things at good prices, integrate them effectively, and then operate them synergistically with its other businesses," Werbach said. As consumers have been willing to pay more each month for media and communication services, "Comcast has been successful at capturing a share of those dollars."

Contact Jeff Gelles at 215-854-2776,, or @jeffgelles.

comments powered by Disqus