Comcast Corp. (CMCSA) reported excellent first-quarter 2011 financial results, which exceeded the Zacks Consensus Estimate. This fabulous performance was the combined effect of higher broadband subscribers’ addition and increased advertising revenue from NBC Universal, of which Comcast acquired a controlling stake in January 2011. Advertising revenue at NBC Universal’s cable networks increased 14% to $769 million together with 8% increase in advertising revenue of NBC Entertainment to $910 million.
EPS
GAAP net income for the first quarter of 2011 was $943 million or 34 cents per share compared with a net income of $866 million or 31 cents per share in the prior-year quarter. Adjusted (excluding special items) EPS in the reported quarter was 36 cents, beating the Zacks Consensus Estimate of 35 cents.
Revenue
The first quarter of 2011 total revenue came in at $12,128 million, up 31.8% year over year. This was also better than the Zacks Consensus Estimate of $11,077 million. Cable Communications revenue increased significantly coupled with advertising revenue.
Margin
Quarterly operating costs and expenses were $8,062 million, up 43% year over year. However, quarterly operating income was $2,224 million, up 15% year over year. Operating margin, in the first quarter of 2011, was 18.3% compared with 21% in the prior-year quarter.
Share Repurchase and Dividend
During first-quarter 2011, Comcast repurchased 23.3 million of its common shares for $525million. In the reported quarter, Comcast paid dividends totaling $262 million.
Cash Flow
During the first quarter of 2011, Comcast generated $4,066 million of cash from operations compared with $3,565 million in the prior-year quarter. Consolidated free cash flow in the reported quarter was $2,221 million compared with $1,887 million in the year-ago quarter.
Balance Sheet
Cash and marketable securities at the end of the first quarter of 2011 was $1,896 million compared with $5,984 million at the end of fiscal 2010. Total debt at the end of the reported quarter was approximately $40,426 million compared with $29,615 million at the end of fiscal 2010. At the end of the first quarter of 2011, debt-to-capitalization ratio was 0.45 compared with 0.40 at the end of fiscal 2010.
Cable Communications Segment
Quarterly pro forma revenue was $9,084 million, up 5.8% year over year. Pro forma operating cash flow was $3,749 million, up 7.7% year over year. Within this segment, Video revenue was $4,891 million, up 1.7% year over year. High-Speed Internet revenue was $2,106 million, up 8.8% year over year. Voice revenue was $860 million, up 6.5% year over year. Advertising revenue was $455 million, up 10.4% year over year. Business Services revenue was $394 million, up 49.9% year over year. Other revenue was $378 million, up 6.1% year over year.
As of March 31, 2011, Comcast had 17.406 million (up 2.56% year over year) High-Speed Internet customers; 8.870 million (up 3.33% year over year) Voice customers; and 22.763 million (down 0.2% year over year) Video customers.
NBC Universal Segment
Quarterly pro forma revenue was $4,348 million, down 11.5% year over year. Pro forma operating cash flow of this segment was $496 million, up 4.9% year over year. Within this segment, Cable Networks revenue was $2,020 million, up 13.3% year over year. Broadcast TV revenue was $1,352 million, down 34.9% year over year. Filmed Entertainment revenue was $975 million, down 8.4% year over year. Theme Parks revenue was $95 million, up 16.1% year over year.
Our Take
Comcast has becomethe largest integrated content development and distribution company of the U.S.after completing the acquisition of NBC Universal.We also remain quite optimistic regarding the company’s diversification, network upgrade and innovative product offering strategies.Comcast continues to post strong growth in revenue and free cash flow.
However,Comcast is facing severe competition from both telecom and satellite service providers that started offering subscription TV services at a low price. Verizon Wireless (VZ) with FiOS network and AT&T (T) with U-Verse network are likely to make the market highly competitive. Growth of online video streaming companies such as Netflix Inc. (NFLX) and Hulu have become major threats for the company.
We maintain our long-term Neutral recommendation on Comcast. Currently, it holds a Zacks#3 Rank (Hold) on the stock.
COMCAST CORP A (CMCSA): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
Be the first to comment