|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
There Is No Looking Back for Comcast
Posted by: abirk (IP Logged)
Date: February 18, 2014 05:19PM
The broadband market in the U.S. is rapidly increasing due to growing need for speed and connectivity. Comcast Corporation (CMCSA), (CMCSK) is a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. The company has diversified business segments, including cable communications, cable networks, broadcast television, filmed entertainment, and theme parks. Comcast provides its services to residential customers as well as to businesses under the XFINITY brand.
In January 2011, the company acquired a 51% majority stake in media corporation NBCUniversal from GE, and began the process of purchasing the remaining 49% on Feb. 12, 2013, at a cost of $16.7 billion. NBCUniversal operates 30 news, entertainment and sports cable networks, the NBC and Telemundo broadcast networks, television production operations, television station groups, Universal Pictures and Universal Parks and Resorts.
Performance of the Company
In this technological world, people are more interested in new and innovative technology. So, there lies a little room for cable and media companies. Despite this stiff competition, Comcast reported its fourth quarter results with positive figures. Let's look at those positive figures.
The company’s consolidated revenue, operating cash flow, operating income and cable communications revenue increased by 6.2%, 7.0%, 10.7% and 5.2%, respectively. Earnings per share increased by 28.6% to $0.72; excluding favorable tax adjustments, EPS increased by 26.9% to $0.66.
In 2013, Comcast’s dividends and share repurchases totaled $4.0 billion. In 2014, the company’s share repurchase authorization will increase to $7.5 billion, with $3.0 billion to be repurchased. NBCUniversal revenue increased by 7.5%, and operating cash flow increased by 14.3%.
Cable Communications combined video, high-speed Internet, and voice customers increased by 649,000, a 29.0% increase in net additions compared to fourth quarter 2012. The company added 43,000 video subscribers compared with a net loss of 7,000 video customers in the prior-year quarter. This loss is mainly due to competition faced from AT&T (T). The company has been developing its U-Verse network as part of its Project VIP, and expects to expand its wings over 8.5 million customer locations from 2013 through 2015.
However, Comcast added 379,000 Internet customers in the last 12 months. On the other hand its sales to small and medium businesses grew by 26.4%.
Chart Courtesy: USA Today
Partnering with Time Warner Cable
To get more customers under its roof this cable giant is playing very strategically. On Thursday, Feb. 13, 2014, Comcast announced an agreement to merge with Time Warner Cable (TWC). This $45.2 billion deal will help Comcast to acquire approximately 11 million managed subscribers of Time Warner. Other benefits include faster, more reliable service to more customers, and saved money on TV programming costs. This will bring Comcast’s managed subscriber total to approximately 30 million. With this huge subscriber force, Comcast will make a better position over the networks and content producers that will allow the company to get better pricing for retransmission and carriage fees.
To gain more and more customer strength, and to strive well in this competitive market, Comcast is introducing several technically innovative services vis a vis Xfinity Home, Wi-Fi, Streampix, X1, upcoming X2 and the high-speed Metro Ethernet. The company is bundling video, Internet and voice services into one. This will provide its existing subscribers with double play or triple play. These innovations will help to strengthen its foothold against Verizon Communications Inc. (VZ), and other strong players.
Recently, Comcast announced that it will launch X1 DVR with cloud technology, and live in-home streaming TV to new Xfinity TV customers in the company’s Boston region.
Further, Comcast partners with Samsung to deliver 4K Ultra High-Definition (UHD) content to 2014 Samsung UHD TVs, and it further plans to add new networks and distributors to SEEiT platform.
This is not the end; Comcast also partners with Liberty Property Trust (LRY) and will jointly develop the "Comcast Innovation and Technology Center" on the 1800 block of Arch Street in Center City Philadelphia. The proposed $1.2 billion, 59-story, 1,121-foot tower will neighbor Comcast Center, Comcast Corporation’s global headquarters, and become a dedicated home for the company’s growing workforce of technologists, engineers and software architects.
To Put the Pieces Together
Comcast’s innovative services will attract huge customers, as I have said earlier that people are more interested in new and innovative technology. The demand for high speed Internet and Wi-Fi use by small businesses is increasing, and Comcast will attract more customers with its upgraded Internet speed. Comcast looks like a strong company for the long term. Despite some loss of customers, the cable giant has a strong foothold in the video market. The company’s strength can be seen in multiple areas such as continued operational success, strong margins, good customer base and improvements in its content division. Therefore, I am pretty bullish that there is no looking back for Comcast.
Stocks Discussed: CMCSA, CMCSK, T, TWC, AMZN, NFLX, VZ, LRY,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.