Updated from 11:23 a.m. EST
said its acquisition of
cable TV systems is progressing better than Wall Street expected, driving its stock up 8%.
Delivering on promises to effect quick change at the struggling former AT&T Broadband systems, Comcast said Thursday it was stemming the systems' basic subscriber losses. The Philadelphia-based cable operator said it was cutting expenses by converting AT&T's centralized structure into Comcast's more decentralized operations, cutting 12.5% of jobs at the AT&T unit since the merger's Nov. 18 close.
"There will be no more loss of basic subscribers," said Chief Executive Brian Roberts on a Thursday conference call. "In the first 100 days, we have made dramatic inroads in that trend."
Investors applauded: Shares in Comcast, the nation's largest operator of cable TV systems, rose $2.11 to $28.61.
Additionally, Comcast said it would rebuild the AT&T systems more quickly than previously expected, while at the same time cutting capital expenditures below expectations for 2003. "Not only will we be further along, but it will cost less to get there," Roberts said.
The company says cable system earnings before interest, taxes, depreciation and amortization -- a common bottom-line yardstick for cable and other media companies -- will amount to $6.2 billion to $6.3 billion for the year, on the high end of analysts' expectations and at least 26% from pro forma ebitda for 2002, excluding acquisition-related costs. Cable system ebitda margins, dragged down by AT&T's below-par numbers, will rise from about 30.5% in 2002 to 36% in 2003.
On the conference call, Comcast executives -- who spoke about the AT&T integration to the near exclusion of all other operations of the company, including its QVC home shopping arm -- said they would focus in the near future on profitability of operations at the former AT&T systems, rather than unit growth or higher revenue.
"Growth in 2003 will come in margins and profitability," said Comcast treasurer John Alchin. Pro forma revenue growth in 2003 will be in the high single digits, said Comcast,
on the lower end of analysts' expectations.
The company indicated it would be putting no effort into expanding the telephony-over-cable business that had been a top priority under the AT&T regime. Comcast is "putting the business on hold for the next 18 months or so," said Comcast Cable President Steve Burke.
Burke also indicated that the process of rebuilding AT&T's systems would be easier than expected. Though the perception had been that AT&T had "bad plant," he said, "This is not the case."
On a historical and consolidated basis that treats acquisitions when they happened, Comcast earned $1.19 billion, or 75 cents a share, before interest, taxes, depreciation and amortization in the latest quarter, up 85.2% from $642 million, or 68 cents a share, last year, mainly because of the broadband acquisition. On the same basis, fourth-quarter revenue rose 53% to $4.37 billion.
The company said its "operating income" was $329 million, or 21 cents a share, in the latest quarter, compared with a loss of $334 million, or 35 cents a share, a year ago. The bottom-line loss was $51 million, or 3 cents a share, in the latest quarter, compared with $321 million, or 34 cents a share, a year ago.
Adjusted to include the November 2002 broadband purchase and certain other subscriber acquisitions as if they were completed Jan. 1, Comcast reported cable revenue of $4.15 billion, up 11% from $3.74 billion a year ago, and reported cable earnings before interest, taxes, depreciation and amortization of $1.05 billion, up 8.9% from $962 million a year ago.
In a statement, the company said of AT&T Broadband that a "significant amount of integration planning and budgeting is already yielding substantial results. While we've been operating the company for only three months, we're extremely encouraged by the performance of our newly acquired cable systems."