NEW YORK – Comcast Corp. (CMCSA), the largest U.S. cable operator, Wednesday posted a better-than-expected quarterly profit as an increase in high-speed Internet customers offset a loss in basic video subscribers.
The company's board approved a $1 billion increase in its share repurchase plan and said it would also continue to make investments to support its growth.
Investors had expressed concerns that Comcast's hostile bid to buy Walt Disney Co. (DIS) earlier this year was a sign it was losing faith in its core cable operations.
"We've been very active (buying back stock) since we terminated the bid with Disney," co-Chief Financial Officer John Alchin told Reuters. "We think our stock is a screaming buy at these prices."
Philadelphia-based Comcast posted second-quarter net profit of $262 million, or 12 cents a share, compared with a net loss of $22 million, or 1 cent a share, a year earlier.
Revenue rose 10 percent to $5.1 billion from $4.6 billion.
Analysts had expected a profit of 10 cents a share and revenue of $5 billion, according to Reuters Estimates.
"I was impressed with the share repurchase plan," said Sturdivant & Co. analyst Ray Schleinkofer. "The stock should see some support on that. If there was a fly in the ointment, though, the basic subscriber numbers fell a little more than I was expecting."
The company said it lost about 96,000 basic video subscribers during the quarter, or 0.4, percent, but subscribers remained flat at 21.5 million from a year ago.
The company's shares have fallen 15 percent since the day before it launched the Disney bid on Feb. 11. Comcast said that it initiated a $1 billion stock buyback program in December, it has repurchased $750 million of its shares.
Comcast faces competition on the video front from satellite services such as DirecTV Group and EchoStar Communications Corp.'s (DISH) Dish Network.
Phone companies are also aggressively pushing into high-speed Internet service, which, if successful, could stymie the cable industry's growth in that business. On the other hand, Comcast and its rivals are challenging phone companies with telephone service using Internet technology -- known as voice over Internet protocol (search) (VOIP).
Nevertheless, the company slightly lowered its full-year basic subscriber forecast. It now expects basic subscribers to remain flat at 21.5 million, versus an earlier expectation of a 0.5 percent gain, or 100,000.
But the company raised its 2004 forecast for operating cash flow, a metric preferred by cable companies that excludes depreciation and amortization charges and other expenses associated with the capital intensive business.
It expects 18 percent operating cash flow growth for the year, up from its earlier expectation of 15 percent to 17 percent growth.
The company attributed the decline in basic subscribers to seasonality. College students in particular are likely to cut cable services during summer break, which starts in the second quarter.
The company added 327,000 high-speed Internet subscribers to end the quarter with 6 million subscribers. The company added 394,000 high-speed subscribers in the first quarter.