Comcast delivered the Q1 numbers the Street was expecting: Revenue up 14% to $8.39 billion (actually a touch better than the consensus of $8.17B) and adjusted EPS of 19 cents. Operating income was up 23%, and free cash flow was up59%. Its customers spent more on cable TV, but less on phone and Internet connections.
During the 8:30 conference call, we’ll be trying to figure out what to make of the drop in new customer adds: Comcast (CMCSA) added 1.46 millions line of service, down 20% y/y. Some of that the company has said was coming: Digital cable adds were at 494,000 vs 658,000 y/y, because the company was pushing new cable boxes last year.
More confusing to us: Growth in high-speed Internet customers dropped 16% y/y, but digital voice service growth jumped up 9%. We’d assumed those two services were closely tethered.
Joining conference call in progress:
Challenging environment, but bad debt expense doing down, bue to better credit scoring, etc. Churn higher than last year, but getting better sequentially.
Breaking out capex: $1.4 B, down 4% compared to proforma capex y/y. Capex as per cent of revenue down to 17% from 19%. But full-year guidance stays same: Will be about 18% FY 2008, down from 20%.
Free cash flow: $702M, up 59%. Will buyback another $5.89B of stock by end of 2009.
Q1 good, things will slow in Q2, Q3 (seasonality) reaffirming 2008.
Future investments: “Bandwitih reclamation” – converting up to 40 analogue channels into digital. Will be all digital in about 20% of systems by end of year.
Increasing VOD, will have 1,000 HD choices on VOD by end of year. Working on “Project Infinity” (having a whole bunch of stuff on VOD).
Pushing next gen data speeds, now testing in Twin Cities.
Refers to Project Canoe, but not directly.
Some regions in “particular areas” with lots of competition seeing cable sub rev dropping (ie competition from VZ, etc). Thinks digital switch can add more cable subs, because people with analogue TVs “will have to do something”
High-speed Internet: More people taking higher-priced “Blast” package than “Economy” package”
Voice customers: 80% of digital voice customers take all three products. About 18% of overall customers taking triple play. Average revenue per basic sub: $107, up from $96 y/y and $87 in 2006.
Can you discuss marketing plan changes, also leverage?
Marketing up around 20% in last quarter; increasingly doing double and single promotional offers. Target leverage btw 2.5 and 3x? We will be net borrower to pay for dividend, stock buy back, so any acquisitions we make will require more borrowing.
More Qs on product “wins and losses” (per our query above) – Brian Roberts semi-defensive about this, arguing that ARPU (see above) indicates that overall mix ok.
Apologies: Tech problems here. We’ll try to catch up later.