April 28 (Bloomberg) -- Comcast Corp., the largest U.S. cable company, reported first-quarter profit that beat analysts’ estimates after luring new customers with faster Internet speeds and programs that can be viewed online.
Comcast said today that earnings amounted to 31 cents a share, compared with the 30-cent average of estimates compiled by Bloomberg. The Philadelphia-based company added 1.02 million net new customers, more than the 830,000 estimated by Miller Tabak & Co. analyst David Joyce.
Chief Executive Officer Brian Roberts has rebranded the company’s products “Xfinity” to highlight faster Web speeds and features like “OnDemand Online,” which lets customers watch shows on the Web. The cable operator is vying for subscribers with phone companies such as Verizon Communications Inc., which competes with Comcast in cities such as Philadelphia and Washington.
“The cable companies are doing a better job winning back telco subscribers,” said Joyce, who is based in New York. He rates the shares a buy and says he doesn’t own them.
Net income climbed 12 percent to $866 million, or 31 cents a share, from $772 million, or 27 cents, a year earlier, Comcast said in a statement.
Comcast rose 35 cents, or 1.9 percent, to $18.81 at 4 p.m. New York time in Nasdaq Stock Market trading. It has climbed 12 percent this year.
The company shed 82,000 video customers last quarter, partly because more people are using computers to watch their favorite programs online. Comcast has focused on building its Internet business to help make up for those losses.
“There is a real flight to quality for speed and Internet access in the U.S.,” Roberts, 50, said in a Bloomberg Television interview. “Consumers want the best broadband products they can get.”
Advertising sales jumped 24 percent last quarter to $360 million, compared with a 15 percent slump last year. Total sales rose 3.8 percent to $9.2 billion, compared with the $9.15 billion average of analysts’ estimates.
“If you add it all up, it was a great start to the year,” Roberts said. “Advertising growth came back in a big way.”
Still, Comcast said it hasn’t seen improvements in the U.S. housing markets where it offers service, and the unemployment level is still hovering near 10 percent, forcing some consumers to tighten their belts. Comcast decided against providing an earnings forecast for the year partly because of the economic uncertainty.
“While it’s not clear whether we’re entirely out of the woods on the economy, we are cautious and optimistic and are clearly executing better in this environment and against the competition,” Roberts said on the company’s conference call.
Comcast’s average monthly total revenue per video customer rose 6.3 percent to $122.98, as the cable operator generated additional sales with offerings like digital video recorders and pay-per-view movies.
Comcast added 427,000 digital-TV customers and almost 400,000 Internet subscribers in the first quarter. By comparison, New York-based Verizon gained 168,000 customers for its FiOS TV and 185,000 for Internet services. That’s down from 299,000 TV and 298,000 Internet customers a year earlier.
Verizon’s expansion of its fiber-optic network, which offers high-speed Web access and TV service, is almost done, Verizon Chief Financial Officer John Killian said at an investor conference in March. The company, the second-biggest U.S. phone carrier, also withdrew its forecast for 1 million net customer additions this year and beyond.
Comcast’s first-quarter operating cash flow rose 3.5 percent to $3.57 billion and free cash flow surged 38 percent to $1.89 billion. In December, the company announced plans to take a 51 percent stake in General Electric Co.’s NBC Universal TV and film business in a $28 billion joint venture. The companies expect the merger to close within the year after the deal undergoes regulatory scrutiny.
“Cash flows remain robust, although we do think Comcast is likely to come to the capital markets one more time prior to the closing of the NBC transaction to fully finance the deal,” said Joel Levington, managing director of corporate credit for Brookfield Investment Management Inc. in New York.
Comcast will pay GE $6.5 billion in cash to acquire its stake in NBC Universal. Yesterday, NBC Universal issued $4 billion in notes to help finance the deal. Comcast will merge cable channels worth $7.25 billion with the NBC Universal assets, valued at $30 billion.
To contact the reporter on this story: Kelly Riddell in Washington at kriddell1@Bloomberg.net
To contact the editor responsible for this story: Julie Alnwick at email@example.com