FEBRUARY 19, 2009 Comcast Feels Strain of Economic Slump
By NAT WORDEN and VISHESH KUMAR Wall Street Journal http://online.wsj.com/article/SB123495645910509841.html Comcast Corp. reported a 32% drop in fourth-quarter net income because of a write-down and reported slower subscriber growth as the economy's slump weighed on the cable sector, once thought to be relatively resistant to downturns. Comcast, the largest U.S. cable operator by subscribers, said growth in broadband and telephone services slowed sharply. Revenue and free cash flow grew strongly, however, and Comcast raised its dividend 8%. The company's financial results were bolstered by a decline in expenses and growth in the average revenue it gets from each customer, following a price increase. The growth came against what Comcast Chief Executive Brian Roberts described in an interview as an "awful backdrop," but Mr. Roberts also said the company saw some signs of a comeback in consumer spending. "After the October meltdown, we are seeing some minor signs of encouragement," Mr. Roberts said. "As we begin the new year, consumers are looking to add some products and are not just remaining frozen." Comcast's fourth-quarter net income fell to $412 million after a widely expected $600 million write-down on its investment in wireless-broadband provider Clearwire Corp. Excluding the charge, Comcast earned $790 million, or 27 cents a share, up 31% on an adjusted basis. Revenue rose 9% to $8.77 billion. In a sign of caution, Comcast halted its share-repurchase plan in the fourth quarter and said it was unlikely to complete its program for 2009. Chris Marangi, analyst with Gabelli & Co., said some investors will likely interpret Comcast's capital-allocation strategy as a sign that its growth is bound to slow. Weaker consumer spending, coupled with an advertising slowdown and new competition for television and Internet service from telecommunications giants such as Verizon Communications Inc. and AT&T Inc. weighed on the company's subscriber growth, a trend also reflected in the quarterly results of rival Time Warner Cable Inc., released earlier this month. Subscriber additions in Comcast's core business of video, broadband and phone declined 57% for the quarter. Basic-video subscribers fell by 233,000, a sharper drop than the previous year's 100,000. Meanwhile, the company added 184,000 high-speed Internet customers, down from last year's 341,000. Comcast shares fell 53 cents, or 4.1%, to $12.36 Wednesday on the Nasdaq Stock Market. ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
