PHILADELPHIA Comcast Corp., the nation's largest cable operator, reported a 54 percent increase in fourth-quarter profit on solid revenue gains as customers spent more for cable TV.
In a bow to the desires of agitated shareholders unhappy with its weakened stock price, Comcast also said it will start paying a 6.25-cent quarterly dividend starting at the end of April.
Moreover, the Philadelphia-based company is pledging that by the end of 2009, it will spend the remaining $6.9 billion it has allotted to buy back shares in a bid to satisfy a growing chorus on Wall Street to step up its repurchases.
Shares jumped more than 7 percent, or $1.28, to $19.09 at the open of trading.
In the fourth quarter, Comcast reported a net income of $602 million, or 20 cents per share, compared with $390 million, or 13 cents, in the same period a year ago.
Analysts surveyed by Thomson Financial were expecting profit of 17 cents per share.
Operating cash flow in the quarter was $3.08 billion, up 19 percent year-over-year, while free cash flow tripled to just a tad over $1 billion.
Revenue was up 14 percent to $8 billion, beating Wall Street's $7.9 billion average forecast.
The company added 1.2 million revenue generating units the number of services sold and a key metric of performance down from 1.6 million in 2006.
For the year, Comcast posted a 2 percent increase in profit to $2.59 billion, or 83 cents per share, as revenue rose by 24 percent to $30.9 billion.
Among its business segments, Comcast said video revenue rose by 6 percent to $4.5 billion in the quarter. The average cost per customer rose to $61.72 a month from $58.19, which could be a combination of higher prices and more services ordered.
The number of basic subscribers fell by 94,000, compared to a gain of 111,000 in 2006. Even its digital sign-ups slowed, adding 523,000 compared with 614,000 in the prior year.
Comcast's high-speed Internet business saw a 14 percent revenue gain to $1.7 billion. But the company added 331,000 new customers compared with 490,000 in 2006. The average cost per customer fell, as well, to $42.44 from $42.89 a month, perhaps reflecting the effect of competition.
Comcast's phone revenue rose by 73 percent to $523 million. The company signed up 604,000 digital voice subscribers compared with 510,000 in the prior year. However, its circuit-switched business lost 128,000 accounts as Comcast continues to exit this market.
The average cost per digital voice customers fell to $40.34 a month from $43.05.
Comcast said capital expenditures were $1.5 billion in the quarter, up from $1.4 billion. In past quarters, Wall Street had been concerned about increases in the company's capital spending.
Looking ahead, Comcast is projecting an 8 to 10 percent growth in overall revenue and operating cash flow for 2008. It also expects to post free cash-flow growth of at least 20 percent and capital expenditures should fall as a percentage of revenue.