Comcast 4Q profit falls

February 18, 2009 10:31:53 AM PST
Comcast Corp., the nation's largest cable TV provider, said Wednesday its fourth-quarter earnings fell 32 percent, hampered by a $600 million write-down of its investment in wireless technology provider Clearwire Corp. Comcast's revenue and adjusted earnings beat Wall Street estimates, and the company raised its dividend 8 percent. However, the Philadelphia-based company showed markedly slower growth in its video, high-speed Internet and phone businesses. Comcast shares were down 54 cents, or 4.2 percent, to $12.35 in afternoon trading.

Comcast said competition from phone companies has intensified. And fewer customers have been ramping up their subscriptions to more expensive tiers of service.

But the company said it has not seen a massive scaling down from customers who now choose to watch TV shows online. Time Warner Cable Inc., the nation's second-largest provider, warned of the threat of that trend two weeks ago, calling it "the beginning of cord-cutting."

The economy's effect on the pay-TV sector thus far hasn't been disastrous. Providers have been offering discounts and trying to lure customers with "bundled" services of video, Internet and phone that are cheaper than a la carte.

Sanford Bernstein analyst Craig Moffett said Comcast's subscriber trends "were a disappointment" but noted that the "financial results are quite solid."

In the fourth quarter, Comcast earned $412 million, or 14 cents per share, compared with $602 million, or 20 cents per share, in the year-ago quarter.

Excluding items such as the Clearwire charge, Comcast earned 27 cents per share, up 7 cents per share from the same quarter last year. Analysts polled by Thomson Reuters had expected an adjusted profit of 22 cents per share.

Comcast's revenue rose 9 percent to $8.77 billion, ahead of analyst forecasts for $8.64 billion in revenue.

The Clearwire write-down was expected; other Clearwire investors like Google Inc., Intel Corp. and Time Warner Cable have recently taken similar charges against their earnings. The companies invested in Clearwire to develop wireless services, which cable operators need to offset an advantage held by phone companies.

Comcast said that in the fourth quarter, customers ordered 537,000 new lines of service - whether video, Internet or phone - down 57 percent from the same quarter a year earlier. Standard & Poor's analyst Tuna Amobi noted that the figure was near a three-year low.

Comcast's video revenue rose 3.5 percent to $4.74 billion. The company lost 233,000 video subscribers - which left it with 24.2 million overall, down 2 percent from a year earlier. However, Comcast's count of digital customers, who pay more for service, increased by 247,000. That helped Comcast's average revenue per video customer rise 9 percent to $113.80 per month.

Revenue from broadband Internet services rose 9 percent to $1.86 billion. Comcast added 184,000 Internet subscribers during the quarter, down 46 percent from the 341,000 it added in the year-ago quarter. The company ended the period with 14.9 million broadband customers.

Revenue from Comcast's digital phone segment rose 45 percent to $731 million. However, the company's addition of 344,000 digital phone customers was down 44 percent from the amount added in the fourth quarter of 2007.

Advertising revenue fell 5 percent to $409 million.

For the full year, Comcast earned $2.55 billion, or 86 cents per share, compared with $2.59 billion, or 83 cents per share, in 2007. The company's revenue rose 11 percent to $34.3 billion in 2008.

Comcast said Wednesday it would raise its annual dividend by 2 cents to 27 cents, a sign of healthy cash flow at a time when tough access to capital has led to the impending bankruptcy of another major cable operator, Charter Communications Inc.

"We don't have to access the capital markets to maintain where we're at," said Brian Roberts, Comcast's chief executive, in a conference call with analysts. Comcast also has been reducing costs, cutting 3,300 jobs in the third and fourth quarters.

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AP Technology Writer Rachel Metz in New York contributed to this report.

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