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Comcast's profit gets boost from Internet

Earnings rise 8% in the second quarter as more sign up for broadband.

July 31, 2008|From the Associated Press

PHILADELPHIA — Comcast Corp. on Wednesday reported an 8% increase in second-quarter profit, a solid performance in the face of a seasonally slower quarter made tougher by a decelerated economy.

Although the nation's largest cable operator lost basic video subscribers in the quarter, such losses were in line with or better than what analysts had expected.

Notably, Comcast, also the country's second-largest Internet service provider, showed that it was taking market share from rival phone companies, which reported much weaker broadband gains.

Philadelphia-based Comcast posted second-quarter net income of $632 million, or 21 cents a share, compared with $588 million, or 19 cents, a year earlier. Revenue rose 11% to $8.55 billion.

Free cash flow was a highlight of the quarter, more than tripling to $1.2 billion -- at a time when many companies face liquidity issues -- as capital expenditures fell 20%.

Analysts polled by Thomson Financial were expecting, on average, slightly higher profit of 23 cents a share on revenue of $8.54 billion.

Comcast lost 138,000 basic subscribers in the quarter but added 320,000 digital customers. Total video revenue was up 3% to $4.73 billion. Video customers on average paid $63.98 a month, up 4%.

High-speed Internet added 278,000 new subscribers, down 18% from 2007. Revenue was up, though, by 10% to $1.8 billion even as customers on average paid $42.01 a month, a 3% year-over-year decline. The increase in new customers more than offset lower prices.

Since launching phone service three years ago, Comcast is now the fourth-largest phone company in the country and expects to add more than 2 million customers this year.

Advertising revenue was down 2% to $399 million, with particular softness in auto and housing ads but partially offset by higher political spending. Programming revenue was up 10% to $366 million. Properties owned by Comcast include E!, Style Network and the Golf Channel.

Shares of Comcast rose 89 cents, or 4.6%, to $20.07.

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