Comcast Corp. (CMCSA) reported third quarter 2010 financial results, which exceeded the Zacks Consensus Estimate. Adjusted EPS in the reported quarter was 32 cents compared with 28 cents in the prior-year quarter. Adjusted EPS includes $39 million, net of tax expense related to the NBC Universal Transaction.
Adjusted EPS exceeds the Zacks Consensus Estimate of 30 cents. Better-than-expected results were due to a solid customer growth, an improving advertising market and continued strength in Business Services.
GAAP net income was $867 million or 31 cents per share, compared with $944 million or 33 cents per share in the prior-year quarter. Net income declined 8.2% year over year, partly due to costs related to its pending acquisition of NBC Universal.
Revenue
Third quarter 2010 total revenue was $9,489 million, up 7.3% year over year. This was also better than the Zacks Consensus Estimate of $9,337 million. Advertising revenues rebounded in the reported quarter with a 27% year-over-year growth.
Operating margin was 20.6% compared with 19.3% in the prior-year quarter. Operating Income increased 14.2% year over year to $2.0 billion, attributable to solid operating results in the Cable and Programming segments, partially offset by $21 million of NBC Universal-related transaction costs.
Share Repurchase and Dividend
During the third quarter, Comcast repurchased 17.5 million of its common shares for $300million. As of September 30, 2010, Comcast had approximately $2.4 billion of availability remaining under its share repurchase authorization. Comcast also paid cash dividends totaling $265 million.
Balance Sheet and Cash Flow
Cash and marketable securities at the end of the third quarter were $10,995 million compared with just $6,668 million at the end of fiscal 2009. Total debt at the end of the quarter was approximately $31.0 billion compared with $29.1 billion at the end of fiscal 2009.
Excluding the impact of Economic Stimulus Packages, free cash flow during the third quarter was $1,025 million compared with $1,112 million during the prior-year quarter. At the end of the quarter, debt-to-capitalization ratio was 0.40, which remains same to that of the end of fiscal 2009.
During the reported quarter, Comcast had $2.4 billion of cash from operations compared with $2.6 billion in the year-ago quarter. Capital expenditure in the same quarter was nearly $1.4 billion compared with $1.2 billion in the year-ago quarter.
Cable Segment
Revenues from the Cable segment were $9.0 billion, up 6.9% year over year. Operating cash flow from this segment was $3.5 billion, up 7.1% year over year. At the end of the third quarter, Comcast had 16,696 million (up 6.5% year over year) High-Speed Internet customers; 8,353 million (up 13.2% year over year) Voice customers; 22,937 million (down 3.5% year over year) Video customers; and 19,456 million (up 8.1% year over year) Digital Video customers.
Programming Segment
Revenues from the Programming segment came at $416 million, up 8.7% year over year. This was mainly due to higher affiliate and advertising revenues. Operating cash flow from this segment was $150 million, up 26.3% year over year.
Corporate & Other Segment
Revenues from the Corporate & Other segment were $92 million, up 49.8% year over year. Operating cash flow from this segment was a loss of $118 million in the quarter, compared with a loss of $104 million in the year-ago quarter.
We maintain our long-term Neutral recommendation on Comcast. It is currently a short-term Zacks #3 Rank (Hold) stock.
COMCAST CORP A (CMCSA): Free Stock Analysis Report
Zacks Investment Research
