Comcast Corp., the largest U.S. cable company, fell after reporting its 20th consecutive quarterly decline in video subscribers following price increases.
The shares dropped 0.6 percent to $30.42 at the close. Comcast, facing competition from phone companies and Netflix Inc., said today it lost 37,000 video customers last quarter. At least two analysts anticipated the first increase in cable-TV subscribers since 2007.
Investors were “hopeful for positive net video additions,” said Jason Armstrong, an analyst at Goldman Sachs Group Inc. who recommends buying the shares. “That’s what people are focused on even though Comcast has a very good story with broadband.”
The decline in cable-TV subscribers overshadowed a gain of 439,000 high-speed Internet subscribers at Philadelphia-based Comcast, topping the 382,000 average estimate of 11 analysts’ projections compiled by Bloomberg. Average revenue per user rose 7.8 percent to $143.40, a “standout” number, said Marci Ryvicker, an analyst at Wells Fargo & Co., in an e-mail.
Comcast managed to curb video customer losses from a year earlier, when it shed 39,000 cable-TV subscribers. It marked the sixth consecutive quarter Comcast has reduced video losses.
Drop in Video
A rate increase for 62 percent of customers led to slightly higher churn -- the percentage of customers who leave the service each month -- causing a larger drop in video subscribers than analysts estimated, Neil Smit, Comcast’s head of cable, said during a conference call. The average projection was a decline of 23,000 customers.
Comcast also added a net of 164,000 phone customers, less than the 187,000 average analyst estimate.
“Comcast is taking share from the telcos in broadband, which in turn, with good pricing power, is leading to improved profitability and cash flow,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York.
First-quarter net income rose 30 percent to $1.22 billion, or 45 cents a share, compared with $943 million, or 34 cents, a year earlier, the company said in a statement. Analysts had projected 42 cents.
Free cash flow in the quarter increased 37 percent to a record $3 billion.
Comcast revenue increased 23 percent to $14.9 billion, topping estimates of $14.5 billion. NBC Universal sales rose 18 percent to $5.47 billion, helped in part by increased revenue from Super Bowl advertising.
Broadcast television revenue rose 37 percent to $1.85 billion. Cable network revenue advanced 5.8 percent to $2.1 billion.
Comcast bought back $750 million in shares after saying it would repurchase $3 billion in 2012 last quarter. Comcast has gained 28 percent this year.