Cash Rolling In at Comcast - TheStreet

Cash Rolling In at Comcast

The cost-conscious cable juggernaut plans a buyback after its latest capital spending cutback.
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Again showing its savvy with the budgetary scissors,

Comcast

(CMCSA) - Get Report

says it has freed up enough cash for a $1 billion stock buyback.

On Thursday the nation's largest cable TV shop forecast 16% growth in cable operating cash flow, along with "significantly reduced cable capital expenditures," for 2004. The Philadelphia cable giant said those factors would combine to produce consolidated cash flow of $2 billion for the year. That figure is in line with Wall Street's expectations.

But Comcast signaled that it wouldn't have hit that target without its latest belt-tightening effort. Under its latest guidance, Comcast will spend around $3.35 billion on 2004 cable projects. The reduced projection comes as no shock to investors, but it marks a sharp decline from the $4 billion Comcast originally budgeted for 2003. Comcast shares slipped 41 cents to $31.17 on Thursday morning.

With heavy competition from satellite TV players and a stronger broadband push by phone companies, Comcast has been under close watch by investors looking for signs of strain. But the company has shown substantial cost-cutting acumen in turning around acquired properties, and analysts

predicted earlier this month that the entire industry's outlook was improving.

Sales of premium services like broadband Internet access should help cable companies offset the stagnant growth in the TV portion of their business, noted Merrill Lynch analyst Jessica Reif Cohen in a Dec. 1 report.

With basic cable subscriptions growing slowly, operators have

bet on these so-called advanced digital services to fuel their growth.

Time Warner

(TWX)

, for example, announced last week that it would make a major push in offering telephone service to cable customers using a technology known as voice over Internet protocol, or VoIP.

Notably, on Thursday Comcast said it would double its cable modem downstream speed in certain New England markets in an effort to fend off the challenge from phone-company-provided digital subscriber line, or DSL, broadband Internet service. The move shows Comcast intends to compete in the high-speed Internet arena by offering superior technology, rather than undercutting on price.

Though Comcast didn't say sales were improving, the company did project a rise in cash flow, largely due to spending cuts. Comcast, like most of the cable companies, has gotten past the largest portion of its network spending as it upgraded its systems to handle digital signals and two-way Internet traffic.

The company also emphasized its strong liquidity position, saying it has $1.7 billion in cash and controls about $2.8 billion worth of investments in Time Warner and

Liberty Media

(L) - Get Report

.

Happy with the healthier balance sheet, Comcast's board authorized a $1 billion stock repurchase plan. The buyback comes even after a year in which Comcast shares have surged nearly 30%, driven by an upturn at the once-underperforming properties of AT&T Broadband.

Comcast did not comment on any of its other financial targets. Analysts expect the company to post earnings of 3 cents a share on sales of $4.7 billion in the current quarter.