Updated from 10:39 a.m. EDTComcast's ( CMCSA) speedy turnaround of the former AT&T ( T) cable TV systems appears to be moving even faster than expected. The nation's largest cable operator also said that the competitive threat of Baby Bells in the high speed Internet service market isn't as great as recent announcements have led investors to believe. Comcast said Thursday it added 56,900 basic cable subscribers in the first quarter ended March 31, with most of the additions coming at the AT&T Broadband properties it acquired last fall. Analysts had expected that the AT&T systems, which had long been hemorrhaging basic subs, would continue their losing streak. But Comcast has predicted that the AT&T deal, completed last fall, would generate excellent returns as Comcast brought its cost-cutting experience and operational discipline to bear. The Philadelphia-based Comcast also added far more customers for high speed data than analysts had expected. It raised year-end forecasts for high speed Internet and basic subscriber counts, but held steady on all other financial forecasts. Referring to the challenge of integrating AT&T Broadband, Comcast CEO Brian Roberts said, "It's just cable. It's manageable, and the integration is exceeding "almost every expectation we set for ourselves." Comcast, which has 21.3 million subscribers, said it now expects full-year basic cable additions to be 75,000 to 100,000, instead of the flat subscriber count it had previously forecast. It added 417,000 high-speed Internet subscribers in the quarter, and now expects to add 1.6 million during 2003 -- up from a range of 1.3 million to 1.4 million -- for a total of 5.2 million. Comcast's shares, which have been climbing since last October, were trading at $30.25 Thursday afternoon, down 17 cents.
Comcast Cable President Steve Burke spent part of the company's conference call with analysts Thursday arguing that the threat to Comcast's cable modem business from Verizon's ( VZ) and SBC Communications' ( SBC) recently announced DSL price cuts had been overstated. Verizon and SBC, which overlap with 77% of Comcast's systems, have already been very aggressive with price-cutting over the last year or two, said Burke. "We've been very aggressive right back," he said. "It was competitive in the first quarter and we added 400,000 subscribers." Burke said Comcast's cable modem service has several advantages over the telcos' DSL service. In its upgraded systems, Comcast can offer high speed data to 100% of its subscribers, compared to an estimated 60% of telephone customers. That number drops to "well below 50%," said Burke, if one considers only the households that can receive DSL at speeds similar to Comcast's. Futhermore, said Burke, it's easier for Comcast's customer service representatives to cross-sell broadband Internet to new video customers than it is for telcos to cross-sell DSL to new voice customers, because Comcast's reps usually can more quickly find out if broadband is available for a particular household. Burke said the company expected to gain 1 million new data customers this year from people calling to sign up for video service.
In the first quarter, Comcast reported consolidated revenue of $5.52 billion, ahead of the Thomson First Call estimate of $5.3 billion, and up 9.7% from pro forma figures for the first quarter of 2002. Earnings before interest, taxes, depreciation and amortization amounted to $1.64 billion, up 22.1% on a pro forma basis and in line with estimates. The net loss for Comcast amounted to $297 million, or 13 cents a share, in the latest quarter, compared with a loss of $89 million, or 9 cents a share, last year. Comcast, which has 21.3 million subscribers, said it now expects full-year basic cable additions to be 75,000 to 100,000, instead of the flat subscriber count it had previously forecast. It added 417,000 high-speed Internet subscribers in the quarter, and now expects to add 1.6 million during 2003 -- up from a range of 1.3 million to 1.4 million -- for a total of 5.2 million.