Earnings: Comcast Net Up 7 Percent In 2Q06; Voice Starts To Take Off

Comcast (CMCSA) was all smiles Thursday as the company turned in eye-catching results for 2Q06 — driven, in part, by a stronger-than-expected showing from Comcast Digital Voice. Net income rose 7 percent in 2Q06 to $460 million, or $0.22 per share, compared to $430 million, or $0.19 per share in 2Q05. Revenue was up 11 percent to $6.2 billion from $5.59 billion the previous year.
Chairman and CEO Brian Roberts set the tone in the earnings call: “We are accelerating … you don’t want to use overhyped words like an inflexion point, but we really feel the phone business is now coming into its own and is going to drive an era of growth that we haven’t seen for a very long time.”
Some highlights:
— Cable revenue rose 11 percent to $5.9 billion on an increase of 816,000 revenue generating units, 61 percent over the same quarter last year.
— 30 percent of Comcast’s cable subscribers take HD and/or DVR services. That’s up from 20 percent a year ago and from 28 percent in 1Q06; those customers spend $65-70 a month.
— PPV revenues increased 30 percent, powered by on-demand growth.
— Comcast had a record 150,000 VOD sessions in 2Q06, up 33 percent from 2Q05. COO Steve Burke said the constant addition of VOD content “makes our digital service superior to our competition.”
— HSD revenues were up 22 percent with average revenue per unit of nearly $44.
— added 306,000 Comcast Digital Voice subscribers, ending the quarter with 1.7 million phone customers. (The company lost 79,000 circuit-switched customers so the net add was 227,000.) The service is now available in 60 percent of Comcast’s footprint with a goal of 80 percent by year’s end. Comcast is averaging about 23,000 voice adds per week, up from about 10,000 a week in 4Q05 and 16,000 in 1Q06.
Adelphia: Roberts said the long-awaited acquisition by Comcast and Time Warner could close in the “next couple days.”
Possible Echostar/DirecTV merger: Roberts: “No way am I going to speculate on speculation.”
Addressable advertising: When asked, Burke said the small-scale trials aren’t expected to have a material impact this year “but you’re going to start to see us put our toe in the water in terms of interactive advertising and, as you know, we’re very bullish on that medium and long-term.”
Sprint-Cable JV: Asked about the upcoming wireless spectrum auction, co-CFO John Allchin deflected attention to the JV, saying, “the real commitment, first and foremost, is to rolling out with the Sprint JV that we have and those must be up and running by the end of the year.”
Earnings | Webcast | Slides | Transcript (SeekingAlpha.com) | Financials

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