Comcast Posts Stellar 4Q - Analyst Blog


Comcast Corp. ( CMCSA ) reported excellent financial results in the fourth quarter of 2011, easily outpacing the Zacks Consensus Estimates. While the company's Cable businesses continue to beat market expectations, NBC Universal has started providing synergies.

Comcast's video subscriber churn became extremely low and the company suffered a loss of just 17,000 subscribers compared with a loss of 135,000 subscribers in the year-ago quarter, which is the most important news of this earnings report.

Enhancement of Shareholders' Wealth

Together with the fourth-quarter 2011 financial report, Comcast announced major changes to its capital return policy. Annualized dividend rate has been raised by a whopping 44% to 65 cents per share. In addition, the Board of Directors has authorized a share buy-back program of a massive amount of $6.5 billion. Of this, $3 billion of share repurchase will be completed in 2012.

Fourth Quarter Results in Details

GAAP net income for the fourth quarter of 2011 was $1,287 million or 47 cents per share compared with a net income of $1,018 million or 36 cents per share in the prior-year quarter. However, quarterly EPS of 47 cents was miles ahead of the Zacks Consensus Estimate of 43 cents.

The fourth-quarter 2011 total revenue came in at $15,042 million, up 54.7% year over year, well above the Zacks Consensus Estimate of $14,809 million. Both Cable Communications and NBC Universal segments generated solid revenue growth.  

Quarterly operating costs and expenses were $10,126 million, up 68.6% year over year. However, quarterly operating income was $2,918 million, up 45% year over year. Operating margin, in the fourth quarter of 2011, was 19.4% compared with 20.7% in the prior-year quarter.

During the fourth quarter of 2011, Comcast repurchased 21.9 million of its common share for $491 million. In the reported quarter, the company paid dividends totaling $309 million.

During 2011, Comcast generated $14,345 million of cash from operations compared with $11,179 million in 2010. Consolidated free cash flow in 2011 was $7,009 million compared with $5,388 million in 2010. Cash and cash equivalents at the end of 2011 were $1,620 million compared with $5,984 million at the end of 2010.

Total debt at the end of 2011 was approximately $39,309 million compared with $29,615 million at the end of 2010. At the end of 2011, debt-to-capitalization ratio was 0.44 compared with 0.40 at the end of 2010.

Cable Communications Segment

Quarterly pro forma revenue was $9,470 million, up 4.7% year over year. Pro forma operating cash flow was $3,939 million, up 6.4% year over year. Within this segment, Video revenue was $4,901 million, up 1.3% year over year. High-Speed Internet revenue was $2,238 million, up 10.1% year over year. Voice revenue was $882 million, up 4.9% year over year.

Advertising revenue was $546 million, down 9.3% year over year. Business Services revenue was $498 million, up 36.8% year over year. Other revenue was $405 million, up 9.1% year over year.

As of December 31, 2011, Comcast had 18.147 million (up 6.8% year over year) High-Speed Internet customers; 9.342 million (up 8.5% year over year) Voice customers; and 22.343 million (down 2% year over year) Video customers.

NBC Universal Segment

Quarterly pro forma revenue was $5,738 million, up 0.8% year over year. The segment's pro forma operating cash flow was $1,052 million, down 6.8% year over year.

Within this segment, Cable Networks revenue was $2,206 million, up 5.3% year over year. Broadcast TV revenue was $1,841 million, down 3.7% year over year. Filmed Entertainment revenue was $1,267 million, down 1.8% year over year. Theme Parks revenue was $498 million, up 4% year over year.

Our Take

Comcast becamethe largest integrated content development and distribution company in the U.S.after completing the acquisition of the majority stake of NBC Universal from General Electric Co. ( GE ). We also remain quite optimistic regarding the company's diversification, network upgrade and innovative product offering strategies.

Comcast continues to post strong growth in revenue and free cash flow. We maintain our long-term Neutral recommendation on Comcast. Currently, it holds a Zacks #3 Rank (Hold) on the stock.

COMCAST CORP A ( CMCSA ): Free Stock Analysis Report
GENL ELECTRIC ( GE ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CMCSA , GE

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