Comcast Corporation (NASDAQ: CMCSA), a cable/broadband entity that competes with Verizon Communications Inc. (NYSE: VZ) and DISH Network (NASDAQ: DISH), reported earnings for the fourth quarter on Wednesday. Adjusted revenues increased 7%, and earnings per share jumped 35% to $0.27. Not a bad performance, and in fact, earnings beat estimates by four pennies according to this source.
Perhaps the biggest piece of news in the release is the increase in free cash flow for the full fiscal year. That jumped 56% to $3.7 billion, driven in part by a decrease in capital spending. I liked reading that management intends on focusing on free cash flow. It better, because it's going to be a challenging environment for the cable business, and the company committed itself to raising its dividend by 8%. On the flip side, though, as has been noted in a couple news reports, Comcast stated in the release that it doesn't feel like buying back stock at the moment. That won't be comforting to shareholders who have seen their shares hovering closer to a 52-week low than a 52-week high.
My personal feeling is this: Comcast is most likely a great long-term holding, but in the shorter-term, the stock could go back to its 52-week low, which is currently pegged at under $10 per share given the bear market and the weak response to the earnings news. The company has a great product in its digital-cable portfolio, and its high-speed Internet service seems to be popular from my anecdotal perspective.
However, I don't think Comcast has fully leveraged the potential of on-demand, and I wish we could get more detailed information on how that is doing, especially in terms of consumer behavior. I'd like to know more about how successful some of the pay-per-view programming is, and what management intends to do to increase buy rates in this area. After all, content companies like The Walt Disney Company (NYSE: DIS) and Time Warner Inc. (NYSE: TWX) are looking to digital distribution to get the full value out of their content libraries. What ideas are currently out there that benefit both the content creator and the architects of the technological platforms? Shareholders need more discussion on this subject. A lot more. Since so many pundits claim that the future of content distribution is not on physical media, where does Comcast see itself in a decade? That will help potential investors decide that they want to do with this stock idea.
Disclosure: I own Disney; positions can change without notice.
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Reader Comments (Page 1 of 1)
2-18-2009 @ 8:00PM
joylondon said...
my biggest hope is that all viewers will become saavy and start using their computers as tv only because of companies like comcast. This particular company has ripped off the public for a tremendous percentage without any benefit to the consumer. They have been arrogant and very non customer service oriented. I hope they too will reap their just results
2-19-2009 @ 1:00AM
adam said...
It is really a shame this company has a monopoly in the many markets it serves. Their service was so bad i told them I was never paying them. From top to bottom this is easily one of the worst run companies. A third grader could give better service then the majority of their employees. Comcast ranks at or near bottom of all customer service surveys. When they give you terrible service as well tell yhem you wont pay them. They accept it cause they know your correct. AVOID COMCAST AT ALL COSTS. comcastmustdie.com