I can't say I had much personal experience with Adelphia, which was the fifth largest cable company in the country when it filed for bankruptcy in 2002. But I did follow the case of the Rigas' family with interest. Dad and founder John and son Timothy Rigas ended up going to jail after treating this huge public company like their own personal candy store.
Founded in 1952 in Coudersport, Penn., Adelphia's name came from the Greek word for brother. The company went public in 1986 and grew by acquisition -- buying up smaller cable providers.
The company went bankrupt in 2002 after disclosing $2.3 billion in debt that was kept off the balance sheet. Federal prosecutors charged the Rigases and other officers of looting the company of an estimated $100 million, much of it spent on ridiculous excess -- like spending $6,000 to have Christmas trees flown in to New York.
Both Rigas men were found guilty and in 2007 started serving time in a Federal prison in Raleigh, North Carolina.
Time Warner Cable (NYSE: TWC) and Comcast (NASDAQ: CMCSA) bought up Adelphia's cable business in 2006, splitting up the customers by region.
Let us know in the comments what you miss about Adelphia. And be sure to check out other Companies That Have Vanished.
Verizon (NYSE: VZ) had decided that customers do not have to be landline clients to get the company's new fiber broadband and TV service. In other words, it is willing to walk away from its core business to move into the future.
According to the AP, "Surveys point to about one in seven U.S. households now lacking landlines." More people are using their cellphones instead of the traditional home phone connection.
The announcement points to the lengths to which Verizon will go to get customers away from cable companies like Comcast (NASDAQ: CMCSA). Cable does not require that people use its voice system, VoIP, to get cable television or broadband connections. If Verizon wants to match cable packages, it has to do the same.
To a large extent, the news is an indication that Verizon is not really a traditional "phone company" any more. The revenue from that part of its operations is shrinking. Its growth comes from cellular customers, home fiber subscribers, and DSL.
Alexander Graham Bell is turning in his grave.
Douglas A. McIntyre is an editor at 247wallst.com.
In a move to help turnaround its troubled business, General Electric Company (NYSE: GE) will sell or divest its appliance division, and could expect to receive between $5B and $8B for the unit, according to the Wall Street Journal. Potential buyers appliance makers BSH Bosch & Siemens Hausger of Germany and Haier Group of China, as well as private equity firms and Controladora Mabe, GE's partner in Mexico.
The Wall Street Journal also reported that Comcast Corporation (NASDAQ: CMCSA) will acquire Plaxo, a networking Web site, in an effort to increase its range of services. Terms of the deal were not disclosed.
To help improve its Ask.com search engine, the Wall Street Journal reported that IAC/InterActiveCorp (NASDAQ: IACI) will buy the Lexico Publishing Group, which owns Dictionary.com, Thesaurus.com and Reference.com.
WEB SITES:
Citing the New England Journal of Medicine, Bloomberg reported that migraine headache medicines, including Merck & Co Inc's (NYSE: MRK) Maxalt and GlaxoSmithKline Plc's (NYSE: GSK) Imitrex caused potentially fatal reactions in at least 11 people. The Journal said people using "triptans," an older class of migraine drugs, could develop serotonin syndrome, which may cause fever, shock, vomiting and rapid heartbeat.
MOST NOTEWORTHY: Comcast, Time Warner Cable, YRC Worldwide and Syniverse were today's noteworthy upgrades:
Soleil upgraded shares of Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) to Buy from Hold on improving fundamentals, as they believe the economic stimulus package should drive consumer demand in 2H08.
Stephens upgraded shares of YRC Worldwide (NASDAQ: YRCW) to Overweight from Underweight as they believe management is making meaningful changes.
Syniverse (NYSE: SVR) was raised to Overweight from Neutral at JP Morgan. The firm upgraded shares based on accelerating organic growth from consumer wireless data usage.
OTHER UPGRADES:
Deutsche Bank upgraded NYSE Euronext (NYSE: NYX) to Buy from Hold.
According to people familiar with the matter, Robert Verrone, one of the most zealous commercial real-estate lenders during the industry's boom, will leave Wachovia Corporation (NYSE: WB) within the next week, the Wall Street Journal reported.
WEB SITES:
Bloomberg reported that the Department of Justice is probing whether UBS AG (NYSE: UBS) helped clients evade American taxes. In an e-mailed statement, the firm said one senior bank employee was "briefly detained" by authorities.
Bloomberg also reported that Vallejo, California's city council voted to go into bankruptcy. Officials said that after talks with labor unions failed to win salary concessions from police and fire fighters, the city does not have enough money to pay its bills.
According to a rumor, TechCrunch reported that the Yahoo Inc (NASDAQ: YHOO) board of directors yesterday authorized Yahoo chairman Roy Bostock, rather than CEO Jerry Yang, to call Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer about re-starting negotiations.
Cable operator Comcast (NASDAQ: CMCSA), a competitor of DirecTV (NYSE: DTV) and DISH Network (NASDAQ: DISH), issued its first-quarter earnings report on Thursday, and overall it was a satisfying set of data. Revenues grew 14% to $8.4 billion. Adjusted earnings per share increased 12% to $0.19 (on a reported basis, however, they did decline by 8%). One of my favorite things to look at is free cash flow -- Comcast scored here, as free cash jumped 59% to over $700 million.
I've never owned Comcast stock, and I'm on record as preferring content companies over distribution platforms. That being said, I do have to say that Comcast is a pretty good name in its industry, and that it seems to be doing quite well with its various offerings. Looking through the earnings release, I see that Comcast added close to half-a-million digital cable customers. The high-speed internet service and digital-phone service also seem to be performing (on an anecdotal level, it does feel like more and more people are taking up the triple-play suite that Comcast is constantly promoting). The programming segment, which includes channels such as E! and The Golf Channel, saw revenues increase 20% and it delivered a nice stream of cash flow. The company bought back almost 2% of its outstanding shares, and management plans to buy more under its repurchase initiative.
If you're looking to get in on the stock, I'd wait for a pullback after Thursday's 8% pop in share price. Like I say, I do like content companies, but Comcast might be an interesting long-term idea, since it will probably be the beneficiary of a desire on the part of media conglomerates such as Disney (NYSE: DIS), Time Warner (NYSE: TWX), and Viacom (NYSE: VIA) to engage more digital distribution via video-on-demand and to, in fact, experiment with day-and-date release (which I talked about in a recent piece). If this paradigm ever hits a critical mass, then Comcast should do well with it.
Disclosure: I own shares in Disney; positions can change at any time.
Comcast Corp. (NASDAQ: CMCSA) stock is falling on reports that the company is in talks with Time Warner Cable (NYSE: TWC) to fund a new wireless Internet program. CMCSA would invest up to $1 billion in the project, a nationwide network using WiMax technology that would be operated by Sprint Nextel (NYSE: S) and Clearwire Corp. (NASDAQ: CLWR). Judging by this morning's action, investors do not seem very enthusiastic about the plan. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CMCSA.
After hitting a one-year high of $29.41 in July, the stock hit a one-year low of $16.11 in January. This morning, CMCSA opened at $20.07. So far today the stock has hit a low of $19.30 and a high of $20.14. As of 12:15, CMCSA is trading at $19.59, down 0.95 (-4.6%). The chart for CMCSA looks bullish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $22.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in 4 months as long as CMCSA is below $22.50 at July expiration. Comcast would have to rise by more than 15% before we would start to lose money.
The Wall Street Journal said the $19B privatization of Clear Channel Communications Inc (NYSE: CCU) was near collapse as the private-equity firms behind the deal and the banks financing it failed to resolve their differences over terms of the credit agreement, people familiar with the matter said.
The Wall Street Journal also reported federal regulators are handing out warnings to banks due to their exposure to development loans and commercial real-estate construction. Sources believe Corus Bankshares Incorporated (NASDAQ: CORS) is facing trouble in the near future due to increasing scrutiny by regulators and the fact that much of the fallout in the condo sector has yet to be felt by banks.
Some banks in the government-sponsored Federal Home Loan Banking system want to guarantee municipal infrastructure projects, the Financial Times reported, thus fulfilling the role traditionally taken by monoline insurance groups such as MBIA Inc(NYSE: MBI).
I've been hearing more and more about Verizon's (NYSE: VZ) FiOS products. I'm sure you've heard about them too -- you can get very fast broadband connections and TV services via fiber-optic technologies. They are meant to compete with cable companies such as Comcast (Nasdaq: CMCSA) and Cablevision (NYSE: CVC), as well as satellite entity DirecTV (NYSE: DTV).
Now comes word of an interesting deal involving a large apartment complex in New York City. According to this press release, Verizon will be supplying its FiOS broadband service to denizens of Stuyvesant Town and Peter Cooper Village. This is a significant accomplishment for Verizon, to be certain, since there are 110 buildings in the complex. Verizon is counting on FiOS to be an important driver of its business going forward. Reading through the press release, I do have to say that the speed potentials do sound impressive, and that the residents of this complex have something to look forward to -- I should point out, though, that I've never tried FiOS. Still, I do know someone who has the service, and from what I hear, it's pretty satisfactory, to say the least. As an interesting example, FiOS at its optimum speed level could download a movie 90 minutes in length in a little over three minutes. Now that's fast!
Verizon's FiOS scored an impressive deal here, and it will be interesting to see how many more transactions of this type the company will successfully execute. And you know what's pretty neat about Verizon? Unlike the competitors mentioned here, Verizon has a rather juicy dividend yield to go along with its broadband-content distribution model -- about 4.6% as of yesterday's close. FiOS and dividends -- it has a nice ring to it, doesn't it?
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
The FCC has an understanding with the broadband providers in the telecom and cable industries. All consumers and websites will have the same access to bandwidth. A site that takes up very little in terms of data transferred from an internet company is treated no better than YouTube, which uses a lot of bandwidth capacity.
The FCC is charging that Comcast (NASDAQ: CMCSA) has broken the net neutrality pact. According toThe Wall Street Journal, "Comcast stands accused by software companies, public-interest groups and academics of degrading customers' ability to use file-sharing software, which enables users to send high-quality video files over the Internet."
While broadband subscribers and websites would all like to be treated as equals, they do not all use equal internet capacity. Video sites not only use more bandwidth, they can take capacity from other customers on the network. Cable and telecom companies do not have infinite access to push and pull bits though their systems. To improve that access they would have to spend billions of dollars to upgrade their cooper and fiber lines.
The time may come, and it may be soon, that the democracy of the internet goes away. Consumers and web properties who fill the "pipes" with content may well have to pay a higher toll.
Movie-rental business Blockbuster (NYSE: BBI) reported earnings for the fourth quarter yesterday. They weren't bad; while the top line only managed an increase of just under 4%, net income on an adjusted basis more than doubled to 26 cents per share. For the full fiscal year, revenue was essentially flat, and the adjusted net loss widened to 71 cents per share versus a loss of 1 cent per share in the previous fiscal year. Those numbers, it seems, aren't so good.
And neither are the stats behind the flow of the green stuff. Operational cash flow declined for the quarter and was negative for the year. Free cash flow was flat for the quarter and negative for the year. In the previous year, both cash from operations and free cash flow were positive.
What do I think of Blockbuster? Not much. It's a competitor of Netflix (Nasdaq: NFLX), and it also competes against video-on-demand and pay-per-view services offered by cable businesses such as Comcast (Nasdaq: CMCSA). I know Blockbuster is trying to turn itself around, attempting to cut costs, restructure, and find its way in this era of new content-distribution models, but I just don't have strong confidence in its potential for long-term growth. Heck, I haven't stepped foot in a Blockbuster in a long time. Know why? There aren't any around me, and that wasn't the case many years ago. I actually use Redbox for my rental needs these days.
Blockbuster may have beaten estimates, but that doesn't mean I'm a believer. Maybe it will indeed turn around in the future, but I'll let other investors take their chances with this low-priced equity.
Steven Mallas owns none of the companies mentioned here.
TiVo Inc. (NASDAQ: TIVO) saw a smaller loss than expected in the fourth quarter just reported on yesterday. The DVR pioneer's net quarterly loss was $6.36 million compared with $19.5 million in the year-ago quarter. Much of the difference was due to TiVo's shift away from making its own hardware and set-top boxes to licensing its technology to cable and satellite operators.
So far, TiVo has lined up Comcast Corp. (NASDAQ: CMCSA) as a large cable customer for its patented digital video recording software, and a partnership with private company Cox Communications is in the works as well. CEO Tom Rogers said, "The key for TiVo now is to secure new, legitimate distribution partnerships with cable and satellite pay-TV providers." Does this mean the end of the standalone TiVo box that pioneered the DVR market in the U.S.? Hard to say, but the focus of the company's efforts isn't pointed in that direction.
For the quarter, TiVo's sales revenue actually went down to $74.1 as hardware revenue declined in a large way to $23.9 million-- a 45% drop from the year-ago period. The company did add 33,000 net TiVo-owned subscribers in the fourth quarter, which was a significant drop from the 101,000 customers signed in the year-ago period. Adding to some slight misery for the company, TiVo lost 122,000 subscribers in the quarter due to competing products and service mainly sold by former partner DirecTV Group, Inc. (NASDAQ: DTV). At this time, TiVo has 3.95 million TiVo-owned customers.
Back in August, I labeled Comcast Corp. (NASDAQ: CMCSA) as a 'slacker stock,' "which like its human equivalent spends his days sitting on the coach playing video games in his underwear and whining about his lot in life." Now, the world's largest cable company, which has dropped more than 30% this year, has finally grown up.
The Philadelphia-based company reported that net income soared 54% to $602 million, or 20 cents per share, beating the 17 cent consensus estimate of analysts surveyed by Bloomberg News. Sales surged 14% to $8.01 billion, also beating analysts' expectations. As if that wasn't enough, Comcast also announced a $6.9 billion stock buyback and said it would begin paying its first dividend in almost 10 years. The company's guidance also was strong. Particularly noteworthy was the expected decline of capital expenditures as a percentage of revenue to 18%. Revenue and operating cash flow is expected to grow 8% to 10% with free cash flow jumping 20% to $2.3 billion.
Comcast seems to be listening to the complaints of shareholders who are concerned about the company's poor stock performance. Whether this will make Chieftain Capital Management, which last month called for the ouster of CEO Brian Roberts, remains to be seen. One quarter is not a trend.
My wife and I are not sure whether we am sticking with the company's triple play deal that expires at the end of the month or switch to Verizon Communications Inc. (NYSE: VZ)'s FiOS. I bet I am not alone. It will be interesting to see if the company's churn rate starts to increase in the coming months.
This post is part of a series on some of the most memorable companies that have disappeared.
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Here are some highlights from this past week's 
Cable operator 
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I've been hearing more and more about 
Movie-rental business 
Back in August, I labeled 
Comfort Zone Investing: Exploit volatility with constant dollar investing
Merck earnings preview: No miracles expected
Apple reports Monday -- buy AAPL before earnings?
