reported better-than-expected results Tuesday, spotlighting the fissure between winners and losers in the cable TV system operation business.
reported third-quarter results Monday, Cox's results indicate that some cable operators are more than able to offset slowing demand for basic video by selling advanced services such as high-speed Internet access.
Their strength sets them apart from operators such as
AT&T Broadband unit, due to merge with Comcast, and
, which last week
warned of worse-than-expected third-quarter results and on Monday saw its already junk-rated debt downgraded further by Moody's Investors Service.
Although Comcast is expected to improve AT&T Broadband's results following the merger, Charter and other cable operators find themselves struggling to fight off subscriber defections to competitive direct broadcast satellite services, as well as to convince investors that their heavy debt and capital expenditures will pay off in the form of free cash flow.
Cox's shares fell $1 Tuesday morning to trade at $29.15. Shares in Cox are down 30% from their 52-week highs -- a decline that actually puts Cox at the less-beaten-down end of the cable stock universe.
"Our results are far better than our stock price indicates," Cox CEO Jim Robbins said on a conference call Wednesday.
For the third quarter ended Sept. 30, Cox reported revenue of $1.28 billion, up 15.5% from the pro forma figure for the third quarter of 2001. Analysts surveyed by Thomson Financial/First call had forecast revenue of $1.27 billion.
Earnings before interest, taxes, depreciation and amortization, a common bottom-line yardstick for cable companies, grew 14.4%.
Executive vice president of operations Pat Esser credited Cox's results to its strategy of marketing a bundle of video, high-speed Internet and telephony.
The company reported lower-than-expected additions for advanced digital video service, saying that it had deliberately slowed marketing for digital video in favor of the telephony and Internet services that provide higher margins and greater differentiation from DBS.
Cox reiterated guidance for full-year 2002, except for basic subscriber growth. In place of the prior estimate of year-over-year subscriber growth of 1.3% to 1.5%, Cox now says basic subs will grow in a range between 1.1% to 1.2%.
Cox said it expected to raise prices for high-speed Internet service in some local systems starting in the fourth quarter. The company says it doesn't expect those price increases, continuing into 2003, to disrupt demand for high-speed data.