Comcast ( CMCSA) added a bit of gloom to the budding consumer tech rally Thursday after reporting better-than-expected first-quarter results. Shares of the No. 1 cable provider had jumped as much as 6% soon after the news of the strong numbers. But those gains started to slip after the earnings conference call where Comcast shared some concerns about weakening sales patterns. The Philly cable shop said sales -- which had been humming along just fine for most of the first quarter -- started to sputter in March and April. "No question, March and April are lower than we wish they were," Comcast executives told analysts on a conference call Thursday. Comcast blamed the economy and factors like drooping home construction for the sudden weakness in the business, but competition seems to have played a role, as well. Both AT&T ( T) and Verizon ( VZ), which offer TV and Internet services in Comcast's territory, reported solid subscriber gains in the first quarter. And Verizon commented that business conditions were not worsening. If Comcast's point about the economy impacting sales is true, it could be like a jab to the ballooning upbeat mood among tech investors who are betting on a market recovery based on solid consumer spending. The surprising signs of instability don't bode well for investors, either. Hopes had been rising that Comcast would use a new fundraising opportunity to refinance debt and use the extra cash to pay higher dividends or launch a new stock buyback.
But due to the unexpected slump, Comcast squashed the notion of a big shareholder-appreciation gesture, basically ruling out an increase in funding for stock repurchases. "The economy is still very tough," Comcast executives said on the call, pointing to rising vacancy rates, higher unemployment and lower housing starts. As a result, the executives said the company was being "very conservative" with its cash.