Comcast Corp. (CMCSA) is the largest cable MSO (multi service operator) in the U.S. and a leading media and entertainment company. Comcast provides basic video, digital video, high-speed broadband (Internet) and telephony services to individuals and business enterprises. In addition the company provides filmed entertainment, cable networks, broadcast TV services and operates theme parks.
Over the last 3-4 years, the internal dynamics of the U.S. pay-TV industry have been gradually shifting from cable TV operators to large telecom operators and low-cost over-the-top service providers. Extensive network of fiber-based video services from telecom operators and the strong presence of online video streaming providers are posing significant threat to the existing cable TV business model. Meanwhile, cord-cutting has become a serious concern for major pay-TV operators. Comcast is also facing all these negatives.
Nevertheless, Comcast has significantly enhanced its digital video offerings. Accordingly its customer churn rate and average revenue per user (ARPU) have also improved. Notably, fourth quarter of any year generally remains seasonally strong for the cable TV industry. Moreover, investors may get updates regarding the company’s proposed merger with Time Warner Cable Inc. which is awaiting regulatory approval at present.
Comcast currently carries a Zacks Rank #3 (Hold). The company has generated a positive average earnings surprise of 2.58% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: Comcast meets Q4 earnings. Our consensus earnings estimate called for an adjusted EPS of 77 cents and the company reported adjusted EPS was exactly the same. Investors should note that these figures take out stock option expenses.
Revenue: Comcast reported total revenue of $17,732 million surpassing our estimate by $54 million.
Key States to Note: In the reported quarter, Comcast added 6,000 video customers. At year end, the company had 22.383 million video subscribers, down 0.9% year over year. Quarterly high-speed broadband customer addition was 375,000. At year end, the company had 21.962 million high-speed Internet subscribers, up 6.2% year over year. The company also added 123,000 voice customers. At year end, the company had 11.193 million voice subscribers, up 4.4% year over year.
Stock Price: At the time of writing, the stock price of Comcast was down nearly 1.70% (99 cents) in the per-market trade on Nasdaq. Clearly the initial reaction to the release is negative. We believe significantly weak video customer addition coupled with a drop in the number of customer addition for both high-speed Internet and voice are near-term concerns for the investors.
Check back later for our full write up on this Comcast earnings report later!
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