posted a drop in second-quarter profit Thursday but an improved operating income.
The Atlanta-based cable TV system operator posted second-quarter earnings of $62 million, or 10 cents a share, on sales of $1.6 billion. A year ago the company made $118 million, or 19 cents a share, on sales of $1.42 billion.
Analysts surveyed by Thomson First Call had forecast an 11-cent profit on sales of $1.59 billion.
Operating income grew 27% to $213.9 million, but the company reported $122 million less in investment gains than in the year-ago quarter, as well as a higher income tax expense.
Operating cash flow -- that is, operating income before depreciation and amortization, and excluding gains or losses on sales -- amounted to $616 million for the quarter, ahead of the First Call consensus of $604 million.
Ignoring the recent sale of systems amounting to 53,000 customers, Cox lost 54,000 basic cable customers in the seasonally slow second quarter, somewhat more than analysts had expected.Cox, which has been marketing telephone service for several years, added 66,000 customers in the quarter, ahead of analysts' estimates. The company added 98,000 high-speed Internet customers, falling in the range of expectations.
The company generated $155.3 million in free cash flow, or cash flows provided by operating activities less capital expenditures.
The news comes on the heels of mostly strong reports Wednesday from rivals
, though both those cable giants indicated they would have to spend more in the future to regain basic cable momentum.
Cox said its 12% revenue growth over the year-ago quarter was led by growth in advanced-service subscriptions such as digital cable, high-speed Internet access and telephony, as well as higher basic cable rates. An increase in Cox Business Services customers, as well as an increase in advertising sales, also contributed to overall revenue growth.
Programming costs increased 12% to $320.7 million, reflecting rate increases and customer growth. Overhead costs rose 11%, with marketing expense rising due to additional marketing related to new video products and an industry-wide campaign aimed at satellite competition, as well as a 9% increase in costs associated with Cox Media, Cox's advertising sales business.
The company reiterated its forecast for revenue growth of 11.5% to 12.5% over 2003, operating cash flow growth of 14% to 15% over 2003, and capital expenditures of $1.35 billion to $1.40 billion.
On Thursday morning, Cox shares were up 14 cents to trade at $28.12.