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Comcast's 3rd quarter results, announced Wednesday, look a bit more like those of a growth company: Revenue increased 14.2%, operating income 11.0%, operating cash flow 10.5%, and EPS 15%. This likely isn't sustainable at that level, as the Olympics and other non-recurring factors contributed to the spike. But the momentum in Cable, in terms of video (subs increased by 32,000, the best third quarter result in 10 years) and high speed internet (subs increased by 330,000, the best third quarter result in 7 years), is real.
On the cost side, Comcast Cable is still dealing with double digit programming cost increases, expected to decline gradually, and increased capex due to the X1 rollout and other new technologies, putting some slight pressure on margins. And the cost of a wireless entry hasn't been specified yet.
Rather than breakdown Goliath's numbers, which you can look at if you want to, I will try to highlight a few interesting points (earnings call transcript from Seeking Alpha).
Responding to a question about whether Comcast can make money from its MVNO (wireless) relationship with Verizon, CEO Brian Roberts said in part:
"We fundamentally believe we can make money for the shareholders through a wireless offering with the unique relationship that we have with the Verizon MVNO. We can't go into detail about that relationship for obvious reasons, but we have the ability to do things that we think put us in a position to make that statement come true and create real value for our shareholders along the way."
Which seems to imply that the Verizon MVNO is something more complex than a straightforward wholesale arrangement.
Neil Smit (CEO, Comcast Cable) adds: "We are going to have to include handset procurement as part of it, but we built that in the model."
Steve Burke (CEO,NBCU) on advanced, addressable advertising ( targeted to households or individuals across, ideally, different devices and media):
"Advanced advertising has been around – people have been talking about it for a long time. It's not easy. It's hard to develop these products, but it's clear what advertisers want. They want to combine the data intensity of Internet advertising with the clear value and ability to change people's perceptions that you get with a television ad. So, it's a pretty important part of Neil and my agenda, and I think we're at the head of the pack in terms of delivering on it. But there's still work to do."
Perhaps further complicated by recently instituted FCC privacy rules, (set to take effect in about a year), though there's debate about that.
Steve Burke on rising OTT competition, such as the soon-to-be DirecTV Now: "I think we all have a healthy degree of skepticism that these new over-the-top entrants are going to create millions and millions and millions of subscribers any time soon."
Neil Smit on how X1 (now rolled out to 45% of residential customers) is helping to reduce churn, a key factor in sub growth: "Retention has improved for 32 consecutive month."
Smit on the IP (Internet Protocol) transition: "Well, as you mentioned, we'll be going to an IP-based video solution over the next, let's just call it, couple years. We have the product in the lab. It's working well."
Smit on Business Services, which grew 15%:
"We are doing hyperbuilds now where we go in – we used to go into an industrial park and we had to sign up the customers before we pulled the fiber in. Whereas now we know in these industrial parks we're going to get the customers. It's just a question of time before we get them on that and so we're building in, assuming we're going to get the customer base. It's a little bit more aggressive stance."
Smit on XFINITY Home: "About a year and a half ago, we announced we passed 500,000 customers and it's grown significantly from there."
(So no new numbers.)