Comcast Reports First Quarter 2008 Results
PHILADELPHIA, May 1 /PRNewswire-FirstCall/ -- Comcast Corporation (Nasdaq: CMCSA, CMCSK) today reported results for the quarter ended March 31, 2008. The following table highlights financial results (dollars in millions, except per share amounts):
1st Quarter Consolidated 2008 2007 Growth Revenue $8,389 $7,388 14% Operating Cash Flow $3,174 $2,763 15% Operating Income $1,555 $1,261 23% Net Income $732 $837 (13%) Earnings per Share $0.24 $0.26 (8%) Free Cash Flow $702 $442 59% Adjusted Net Income(1) $588 $537 10% Adjusted Earnings per Share(1) $0.19 $0.17 12% Pro Forma Revenue(2) $8,389 $7,602 10% Pro Forma Operating Cash Flow(2) $3,174 $2,845 12% See notes below.
Brian L. Roberts, Chairman and CEO of Comcast Corporation, said, "Our results for the first quarter mark a solid start to 2008. We delivered healthy growth in revenues, operating cash flow, free cash flow, adjusted EPS and strong unit additions. Our performance demonstrates that our operating strategy is working in an economic and competitive environment that continues to be challenging. We are confident that our outlook for 2008 is achievable and we are on track to deliver on our goal of consistent and profitable growth that builds long term shareholder value. In addition, we invested $1 billion to repurchase nearly 2% of our shares outstanding in the first quarter of 2008, and, on April 30, we made our first payment on our recently announced quarterly dividend to shareholders."
Revenue increased 14% in the first quarter of 2008 to $8.4 billion while Operating Cash Flow (as defined in Table 7) increased 15% to $3.2 billion and Operating Income increased 23% to $1.6 billion. This growth was due to strong operating results at Comcast Cable and in our Programming segment as well as the positive impact of cable acquisitions.
On a pro forma basis(2), Consolidated Revenue increased 10% to $8.4 billion in the first quarter of 2008 while Consolidated Operating Cash Flow increased 12% to $3.2 billion.
Net Income in the first quarter of 2008 was $732 million, or $0.24 per share compared to $837 million or $0.26 per share in the prior year. Net income in 2008 and 2007 includes gains from the dissolution of cable partnerships. Excluding these one-time gains in both periods and as reconciled in Table 7-B, Adjusted Net Income for the first quarter of 2008 increased to $588 million, or $0.19 per share, compared to $537 million or $0.17 per share in the first quarter of 2007.
Net Cash Provided by Operating Activities increased to $2.3 billion for the three months ended March 31, 2008 from $2.0 billion in 2007 due primarily to strong operating results.
Free Cash Flow (described further on Table 4) totaled $702 million in the first quarter of 2008 as compared to $442 million in 2007. The increase in Free Cash Flow is due primarily to growth in consolidated Operating Cash Flow along with relatively unchanged capital expenditures at Comcast Cable totaling $1.4 billion.
Pro Forma Cable Segment Results(3)
Revenue increased 10% to $7.9 billion for the first quarter of 2008 as compared to $7.2 billion in the first quarter of 2007. The increase in first quarter revenue reflects price increases for our video services as well as solid unit growth for Comcast High-Speed Internet, Comcast Digital Voice and Comcast Digital Cable with advanced services, offset by modestly lower average revenue per unit on several products due to an increase in customers receiving service as part of a promotional offer or in a new product package.
Operating Cash Flow (as defined in Table 7) grew 9% to $3.1 billion in the first quarter of 2008 from $2.9 billion in the first quarter of 2007. Operating Cash Flow margin was 39.7%, a slight decrease from the 39.9% reported in the first quarter of 2007, reflecting an increase in marketing expenses as well as increased costs as Comcast scales its Business Class services.
- Basic video subscribers declined 57,000 or 0.2% during the first quarter
- Added 494,000 digital cable subscribers during the first quarter -- 65% or 16.0 million video subscribers have digital service compared to 55% or 13.7 million one year ago
- 6.9 million or 43% of digital cable subscribers have advanced services such as digital video recorders (DVR) and/or high-definition television service (HDTV) compared to 5.2 million or 38% one year ago
Video revenue increased 5% to $4.7 billion in the first quarter of 2008 from $4.5 billion in 2007. The revenue increase reflects price increases for basic and digital video services, growth in digital video customers, and increased demand for digital features including ON DEMAND, DVR and HDTV, offset in part by an increasing number of customers in promotional offers.
Comcast added 494,000 digital cable customers in the first quarter of 2008 including 310,000 full digital cable and 184,000 digital starter subscribers. During the quarter, 450,000 digital cable customers added advanced services, like DVR and HDTV, to their digital service either by upgrading or as new customers. As of March 31, 2008, 43% or 6.9 million of our digital cable customers receive advanced services, 33% or 5.3 million receive full digital cable, and 24% or 3.8 million are digital starter subscribers.
- Added 492,000 high-speed Internet subscribers during the first quarter
- penetration reached 28% or 14.1 million customers
High-speed Internet revenue increased 12% to $1.8 billion in the first quarter of 2008 from $1.6 billion in 2007. The revenue growth reflects a 1.6 million or 13% increase in subscribers from the prior year offset by a 2% decline in average monthly revenue per subscriber to $42.18. The strong subscriber and revenue growth in the first quarter of 2008 benefited from the introduction of additional promotional offers and speed tiers, including Comcast's BLAST and Performance Plus services (8Mbps or higher service) and Comcast's Economy Internet service (768Kbps service).
- Added 639,000 Comcast Digital Voice (CDV) customers during the first quarter - penetration reached 12% or 5.1 million customers
Phone revenue increased 65% to $587 million in the first quarter of 2008 from $356 million in 2007. Reflecting the addition of 2.6 million CDV subscribers in the last twelve months, revenue from CDV service more than doubled to $573 million in the first quarter of 2008 compared to the same period of the prior year. Circuit-switched phone revenue declined $69 million to $14 million in the first quarter of 2008. Comcast has 66,000 circuit-switched customers, and expects to wind down that business by mid-year 2008.
Advertising revenue increased 6% to $344 million in the first quarter of 2008 from $322 million in 2007, due primarily to one additional week in the broadcast advertising calendar and an increase in political advertising including revenue from the U.S. presidential primary elections. Excluding the positive impact from the extra broadcast week and political advertising, advertising revenues decreased 5% from a year ago, reflecting softness in the advertising marketplace, particularly in auto and housing-related categories.
Programming Segment Results
Comcast's Programming segment consists of our national programming networks E! Entertainment Television and Style Network (E! Networks), The Golf Channel, VERSUS, and G4.
The Programming segment reported first quarter 2008 revenue of $363 million, a 20% increase from the $302 million in 2007 reflecting one additional week in the broadcast advertising calendar, higher viewership as well as higher advertising and distribution revenue. Operating Cash Flow increased to $113 million or 76%, from the $65 million in 2007 due to the strong revenue.
Corporate and Other
Corporate and Other includes corporate overhead, Comcast Spectacor, Comcast Interactive Media (CIM), and other operations and eliminations between Comcast's businesses. For the first quarter of 2008, Corporate and Other revenue increased to $110 million from $88 million in the first quarter of 2007 primarily due to the strong performance at CIM from internet advertising and search revenue and the inclusion of Fandango. The Operating Cash Flow loss for the first quarter of 2008 decreased to $81 million compared to a loss of $96 million for the same period in 2007.
Share Repurchases and Dividends
In the first quarter of 2008, Comcast repurchased 53.1 million of its common shares for $1.0 billion, reducing the number of total shares outstanding by nearly 2%. In the twelve months leading up to March 31, 2008, Comcast repurchased 5% of its shares outstanding. As of March 31, 2008, Comcast had approximately $5.9 billion of availability remaining under its share repurchase authorization, which it intends to fully utilize by the end of 2009.
Since the inception of the repurchase program in December 2003, Comcast has invested $11.5 billion in its common stock and related securities, reducing the number of shares outstanding by 16%. These investments include repurchasing $10.1 billion or 489.4 million shares of its common stock and paying $1.4 billion to redeem several debt issues exchangeable into 70.9 million shares of Comcast common stock.
On February 14, 2008, Comcast's Board of Directors declared a $0.0625 quarterly cash dividend on Comcast common stock. The quarterly dividend totaling $185 million was paid on April 30, 2008.
2008 Financial Outlook
For 2008, Comcast reaffirms the following previously issued guidance:
- Consolidated Revenue and Operating Cash Flow growth of 8% to 10%(2)
- Consolidated Capital Expenditures as a percent of revenue expected to decline to approximately 18%
- Consolidated Free Cash Flow growth of at least 20% from the $2.3 billion reported in 2007
The outlook above does not reflect the impact of any tax law changes including the U.S. Government economic stimulus package or any future sales or acquisitions of businesses or operating assets (or related tax effects).
Notes: (1) Net income and earnings per share are adjusted for one-time gains, net of tax, related to the dissolution of the Texas/Kansas City Cable Partnership in 2007 and the dissolution of the Insight Midwest Partnership in 2008. Please refer to Table 7-B for a reconciliation of adjusted net income and earnings per share. Earnings per share amounts are presented on a diluted basis. (2) Consolidated pro forma results adjust only for certain acquisitions and dispositions, including the acquisitions of Comcast SportsNet Bay Area/Comcast SportsNet New England (June 2007), the cable system acquired from Patriot Media (August 2007), and the dissolution of the Insight Midwest Partnership (January 2008). Consolidated pro forma results are presented as if the transactions noted above were effective on January 1, 2007. The net impact of these transactions was to increase the number of basic cable subscribers by 765,000. Please refer to Table 7-A for a reconciliation of pro forma financial data. (3) Cable results are presented on a pro forma basis as described in note 2. Conference Call Information
Comcast Corporation will host a conference call with the financial community today, May 1, 2008 at 8:30 a.m. Eastern Time (ET). The conference call will be broadcast live on Comcast's Investor Relations website at www.cmcsa.com or www.cmcsk.com. A recording of the call will be available on the Investor Relations website starting at 12:30 p.m. ET on May 1, 2008. Those parties interested in participating via telephone should dial (800) 263-8495 with the conference ID number 39992756. A telephone replay will begin immediately following the call until Friday, May 2, 2008 at midnight ET. To access the rebroadcast, please dial (800) 642-1687 and enter passcode number 39992756. To automatically receive Comcast financial news by email, please visit www.cmcsa.com or www.cmcsk.com and subscribe to email alerts.
This press release contains forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could cause actual events or our actual results to differ materially from those expressed in any such forward-looking statements. Readers are directed to Comcast's periodic and other reports filed with the Securities and Exchange Commission (SEC) for a description of such risks and uncertainties.
In this discussion, we sometimes refer to financial measures that are not presented according to generally accepted accounting principles in the U.S. (GAAP). Certain of these measures are considered "non-GAAP financial measures" under the SEC regulations; those rules require the supplemental explanations and reconciliations provided in Table 7 of this release. All percentages are calculated based on actual amounts. Minor differences may exist due to rounding.
About Comcast Corporation
Comcast Corporation (Nasdaq: CMCSA, CMCSK) (http://www.comcast.com) is the nation's leading provider of entertainment, information and communications products and services. With 24.7 million cable customers, 14.1 million high-speed Internet customers, and 5.2 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable systems and in the delivery of programming content.
Comcast's content networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, ten Comcast SportsNet networks and Comcast Interactive Media, which develops and operates Comcast's Internet business. Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia.