Comcast Corp. (CMCSA) reported robust financial results for the third quarter of 2014. The company’s net earnings and total revenue easily outpaced the Zacks Consensus Estimate.
GAAP net income in the third quarter of 2014 came in at $2,592 million or 99 cents per share compared with $1,732 million or 65 cents per share in the prior-year quarter. Further, quarterly adjusted earnings per share of 73 cents steered past the Zacks Consensus Estimate of 71 cents. Meanwhile, total revenue stood at $16,791 million, up 4% year over year and also above the Zacks Consensus Estimate of $16,778 million.
Quarterly operating costs and expenses totaled $11,087 million, up 2.5% year over year. However, quarterly operating income came in at $5,704 million, representing annualized growth of 7%. Operating margin was 34% compared with 33% in the prior-year quarter. During the third quarter, Comcast repurchased 13.9 million worth of common shares for $750 million and paid dividends of $582 million.
In the third quarter of 2014, Comcast generated $5,704 million of cash from operations compared with $5,330 million in the year-ago quarter. Consolidated free cash flow stood at $2,494 million as against $1,968 million in the prior-year quarter. Cash and marketable securities, at the end of the third quarter of 2014, were $5,078 million against $5,291 million at the end of 2013. Total debt at the end of the reported quarter was $48,350 million as against $44,567 million at the end of 2013. The debt-to-capitalization ratio was 0.46 compared with 0.47 at the end of 2013.
Cable Communications Segment
Quarterly total revenue of $11,041 million reflected a 5.2% year-over-year rise. Operating cash flow was $4,464 million, up 5.1% year over year. Within this segment, Video revenues were $5,179 million, up 1% from the prior-year quarter. High-Speed Internet revenues totaled $2,840 million, up 9.6% year over year. Voice revenues were $913 million, down 0.5% year over year. Advertising revenues were $607 million, up 12.3% from the year-ago quarter. Business Services revenues were $1,011 million, up 21% year over year. Other revenues were $491 million, up 2.4% from the prior-year quarter.
On Sep 30, 2014, Comcast had 21.586 million (up 6.4% year over year) High-Speed Internet customers; 11.07 million (up 5.5% year over year) Voice customers; and 22.376 million (down 0.7% year over year) Video customers. The company added a net of 315,000 High-Speed Internet customers compared with 297,000 in the year-ago quarter.
Similarly, Comcast gained 68,000 Voice customers as against 169,000 in the prior-year quarter. On the other hand, the company lost 81,000 video subscribers compared with a loss of 127,000 video customers in the year-ago quarter. In the reported quarter, Comcast gained 72,000 triple-play subscribers and 76,000 double-play subscribers but lost 66,000 single-play subscribers.
NBC Universal Segment
Quarterly total revenue of $5,921 million reflected a 1.2% year-over-year growth. Operating cash flow was $1,416 million, indicated a 13.3% year-over-year increase. Within this segment, Cable Networks revenues were $2,255 million, up 0.7% year over year. Broadcast TV revenues came in at $1,770 million, up 7.7% year over year. Filmed Entertainment revenues were $1,186 million, highlighting a reduction of 15.2% from the year-ago quarter. Theme Parks revenues were $786 million, up 18.7% year over year.
Latest Development
In Apr 2014, Comcast reached an agreement with Charter Communications Inc. (CHTR) to divest 3.9 million subscribers as a strategic decision to ease regulatory concerns over its proposed merger with Time Warner Cable Inc. (TWC). In Feb 2014, Comcast had entered a transaction with Time Warner Cable to acquire the latter in an all-stock deal valued at around $45.2 billion.
The proposed merger is expected to face tough scrutiny and close monitoring by the Federal Communications Commission (FCC). DISH Network Corp. (DISH) has raised several issues against this merger. The deal is likely to get a decision in the first half of 2015.
Comcast currently has a Zacks Rank #3 (Hold).
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