We have reaffirmed our long-term Neutral recommendation on
The company posted strong financial results for the second
quarter of 2012, easily beating Zacks Consensus Estimates. While
its Cable TV businesses continue to beat market expectations, the
NBC Universal division remains weak.
However, the recently concluded London Olympic Games have
significantly raised the TV ratings as well as advertising revenue
of NBC Universal. The struggling video operation is also showing
signs of improvement.
Comcast has completed its major technical innovations, such as
DOCSIS 3.0, all digital networks, and a multi-platform content
delivery network. Several newly launched services, such as Xfinity
Home, Wi-Fi, and X1 will act as long-term growth catalysts for
Comcast. Meanwhile, the stock price has soared nearly 74% in the
last year, which may restrict any above market gain.
Though Comcast is losing basic video subscribers, the company
has performed well while reducing its churn rate despite facing a
slow moving U.S. economy. In the second quarter of 2012, Comcast
lost 176,000 video subscribers compared with 238,000 in the
Furthermore, in the previous quarter, the company gained a net
156,000 high-speed Internet subscribers and 158,000 telephony
customers. Revenue and operating cash flow increased 6.1% and 4.2%,
respectively, year over year.
Comcast decided to sell the wireless spectrums it is hoarding
through the SpectrumCo venture to Verizon Wireless for
approximately $2.3 billion. Verizon Wireless is a joint venture
Verizon Communications Inc.
Vodafone Group plc.
Furthermore, a reseller agreement with Verizon Wireless will
enable Comcast to offer highly demanded 4G LTE services to its
customers. This agreement thus eliminates the company's need to
install a wireless network, which is quite costly, or to acquire
any small wireless provider for offering mobile services.
We also believe a tacit price agreement between Comcast and
Verizon, where their video offerings are overlapping, will be
immensely beneficial for Comcast.
COMCAST CORP A (CMCSA): Free Stock Analysis
VODAFONE GP PLC (VOD): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.