Comcast Boosts Profits, Denies Rumors It's Going Shopping

In a bow to the desires of agitated shareholders unhappy with its weakened stock price, Comcast also said it will start paying a 6.25 US cent quarterly dividend starting at the end of April that it expects will increase over time.

Moreover, the Philadelphia-based company is pledging that by the end of 2009, it will spend the remaining $6.9 billion it has allotted to buy back shares -- in a bid to satisfy a growing chorus on Wall Street to step up its repurchases.

Not Going Shopping

In a conference call with analysts, Chief Executive Brian Roberts allayed any concerns that Comcast would mount another expensive acquisition, such as its past bid for Walt Disney (NYSE: DIS).

"We are not spending any time on any of the large transformative acquisitions that have been speculated about, like Yahoo (Nasdaq: YHOO) or Sprint," he said.

Investors cheered the news, driving Comcast's stock up by $1.11, more than 6 percent, to $18.92.

Beating the Street

In the fourth quarter, Comcast reported a net income of $602 million, or 20 cents per share, compared with $390 million, or 13 cents, in the same period a year ago.

Analysts surveyed by Thomson Financial were expecting profit of 17 cents per share.

Operating cash flow in the quarter was $3.08 billion, up 19 percent year-over-year, while free cash flow tripled to just a tad over $1 billion.

Revenue was up 14 percent to $8 billion, beating Wall Street's $7.9 billion average forecast. Gains were helped by last year's acquisition of Patriot Media & Communications, which serves 81,000 cable TV subscribers in central New Jersey.

The company added 1.2 million revenue generating units -- the number of services sold and a key metric of performance -- down from 1.6 million in 2006.

Rough Seas Ahead

Roberts said the economy softened in the second half of 2007 as competition intensified and he expects these conditions to continue this year.

However, Comcast said customers will continue to see price increases this year.

For the year, Comcast posted a 2 percent increase in profit to $2.59 billion, or 83 cents per share, as revenue rose by 24 percent to $30.9 billion.

Among its business segments, Comcast said video revenue rose by 6 percent to $4.5 billion in the quarter. The average cost per customer rose to $61.72 a month from $58.19, which could be a combination of higher prices and more services ordered.

The number of basic subscribers fell by 94,000, compared to a gain of 111,000 in 2006. Even its digital sign-ups slowed, adding 523,000 compared with 614,000 in the prior year.

Need for Speed

Comcast's high-speed Internet business saw a 14 percent revenue gain to $1.7 billion. But the company added 331,000 new customers compared with 490,000 in 2006. The average cost per customer fell, as well, to $42.44 from $42.89 a month, as Comcast rolled out a cheaper, lower-speed Internet plan amid intense competition.

Roberts said Comcast will begin to roll out Internet speeds that could reach over 100 megabits per second later in the year. It will be available in 20 percent of Comcast's market.

Comcast's phone revenue rose by 73 percent to $523 million. The company signed up 604,000 digital voice subscribers compared with 510,000 in the prior year. However, its circuit-switched business lost 128,000 accounts as Comcast continues to exit this market.

The average cost per digital voice customers fell to $40.34 a month from $43.05.

In 2007, Comcast also began offering packages that bundled two services.

Growth in Forecast

Advertising revenue weakened in the quarter, especially in auto, real estate and retail in Florida and Michigan. Comcast expects political ads to increase in the second half of 2008.

Comcast said capital expenditures were $1.5 billion in the quarter, up from $1.4 billion. In past quarters, Wall Street had been concerned about increases in the company's capital spending.

Looking ahead, Comcast is projecting an 8 to 10 percent growth in overall revenue and operating cash flow for 2008. It also expects to post free cash-flow growth of at least 20 percent and capital expenditures should fall as a percentage of revenue.