Comcast Results Top Expectations as Cable Giant Preps for Wireless Entry
April 27 2017 - 7:42AM
Dow Jones News
By Shalini Ramachandran
Comcast Corp.'s first-quarter results offer a glimpse into why
the cable giant is jumping into the cutthroat wireless business:
Consumers don't want a landline phone anymore, limiting the appeal
of its lucrative "triple play" bundles.
The company lost 5,000 voice customers in the quarter, compared
with an addition of 102,000 in the year-ago quarter. Among just
residential voice customers, the decline was even more stark with a
loss of 27,000.
Offering wireless service will present a new way for Comcast to
encourage package upgrades and further diversify its business.
Earlier this month, Comcast unveiled a mobile offering for any
customer that subscribes to at least its internet service, debuting
unlimited data plans that in some cases undercut rivals.
While many investors have been focused on the company's upcoming
entry into the wireless business, Comcast still reported
better-than-expected financial results in the first quarter. Its
NBCUniversal arm posted strong earnings buoyed by its filmed
entertainment unit.
On the cable side, Comcast added video and high-speed internet
customers, though additions slowed from the prior-year quarter. The
cable company added 42,000 residential and business video
customers, compared with the 53,000 it added in the prior-year
quarter. It added 429,000 broadband customers in the quarter
compared with 438,000 a year earlier.
Overall, net income rose to $2.6 billion, or 53 cents a share,
up from about $2.1 billion, or 43 cents a share, a year ago.
Revenue grew 8.9% to $20.5 billion.
Revenue and profit exceeded estimates from analysts, who were
projecting earnings of 44 cents a share on $20.1 billion in
revenue, according to Thomson Reuters.
As it seeks to highlight new lines of business, Comcast broke
out for the first time the number of customers who subscribe to its
security and home automation services: 957,000. In the quarter,
Comcast added 66,000 new home automation customers, up from 56,000
in the year-ago quarter.
The cable giant's broadband and business services divisions
posted strong sales growth in the first quarter, lifting overall
revenue at the cable business -- which accounts for the bulk of
Comcast's top line -- by 5.8% to $12.9 billion.
Broadband revenue increased 10% to $3.6 billion, while
business-services revenue jumped almost 14% to $1.5 billion.
Landline voice revenue fell 3.6% to $863 million.
At NBCUniversal, revenue rose 15% to $7.9 billion, helped by
strong growth at the filmed entertainment division, thanks to new
movies like "Fifty Shades Darker" and "Get Out." Filmed
entertainment brought in $1.98 billion in revenue, compared with
$1.38 billion in the year-ago quarter.
While the cable networks and broadcast TV units grew revenue and
earnings due to new carriage contracts and streaming content
licensing deals, they both continued to see lackluster ad sales
because of ratings softness. Cable networks' ad revenues declined
2.9% to $826 million, while broadcast TV ad revenue was essentially
flat at $1.3 billion.
Regarding Comcast's dive into the wireless business, many Wall
Street analysts and investors have been skeptical because its
service will rely on a five-year-old reseller agreement with rival
Verizon Communications, raising the prospect that it isn't a stable
long-term solution. Wall Street was also taken by surprise when
Comcast meaningfully underspent analyst estimates in a recent
government auction of airwaves -- a sign that it is remaining
cautious.
With the auction closing, investors are gaming out whether
Comcast ends up buying a wireless company instead. So far, company
executives have signaled that they are happy with their current
approach and don't think they need to buy a wireless carrier.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
April 27, 2017 07:27 ET (11:27 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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