Comcast Corp. (CMCSA) reported better-than-expected fourth quarter 2009 financial results. Quarterly GAAP net income was $955 million or 33 cents per share, compared to just $412 million or 14 cents per share in the prior-year quarter.

However, in the fourth quarter of 2009, the company recognized $130 million (4 cents per share) of income tax benefit. Excluding this item, fourth quarter EPS of 29 cents exceeded the Zacks Consensus Estimate of 27 cents. Higher revenue and lower interest expense from a reduction in total debt are the primary reasons for the positive surprise.

Estimate Revisions Trend

The overall trend in estimate revisions is favorable. Over the last 7 days, 2 of the 27 analysts covering the stock have raised their estimates for 2010. For the last 30 days, 3 of the 27 analysts covering the stock raised estimates for full fiscal 2010 while 1 analyst moved in the opposite direction.

Currently the Zacks Consensus Estimate for full fiscal 2010 earnings is $1.20 per share, which would be a modest improvement over the full fiscal 2009 earnings of $1.18 per share. In 2008, Comcast earned 91 cents per share.

Given the relatively modest positive estimate revisions recently, the Zacks Consensus Estimate has remained at $1.20 per share over the last 60 days. It is unlikely that today’s positive surprise will result in any significant estimate revisions in the coming days.

If Comcast’s results for 2010 come inline with the Zacks Consensus, it would imply an almost flat performance. This deceleration in the company’s earnings growth is reflected in its current Zacks #3 Rank (Hold) and Neutral recommendation.

With respect to earnings surprises, the company’s fairly good track record is not expected to persist in the coming quarters. Comcast produced an impressive average earnings surprise of 18.43% in the last four quarters, which means that it beat the Zacks Consensus Estimate by that amount over the last year.

The current Zacks Consensus Estimate for the first quarter 2010 is 29 cents. There is no upside potential (essentially a proxy for future earnings surprises) of this estimate. In fact, there is a very modest negative surprise possibility (of about 1.67%) for the full year 2010.

Fourth Quarter 2009 in Detail

Fourth quarter 2009 total revenue was $9,067 million compared to $8,811 million in the prior-year quarter. This was also better than the Zacks Consensus Estimate of $8,984 million. All three reporting segments of the company generated year-over-year sales growth in the reported quarter.

Gross margin in the fourth quarter was 59.4% compared to 60.5% in the year-ago quarter. The operating margin was 20% in the reported quarter, remains same year-over-year. For the fourth quarter, Comcast declared the dividend of 9 cents per common share compared to 6 cents in the year-ago quarter. During the same quarter, Comcast repurchased 18.1 million common shares for total consideration of $300 million.

Cash and marketable securities at the end of fiscal 2009 reached $6,668 million compared to $6,037 million at the end of fiscal 2008. Total debt, at the end of fiscal 2009 was approximately $29.1 billion compared to $32.5 billion at the end of fiscal 2008. Excluding the impact of Economic Stimulus Packages, free cash flow during fiscal 2009 was $4,416 million, compared to $3,657 million during fiscal 2008.

Cable Segment
 
Quarterly revenue from the Cable segment was $8,561 million, up 2.6% year-over-year. Operating cash flow from this segment was $3,473 million, up 1.7% year-over-year. At the end of fiscal 2009, Comcast had 15.930 million (up 6.7% year-over-year) High-Speed Internet customers; 7.622 million (up 17.8% year-over-year) Voice customers; 23.559 million (down 2.6% year-over-year) Video customers; and 18.415 million (up 8.3% year-over-year) Digital Video customers.

Programming Segment

Quarterly revenue from the Programming segment was $368 million, up 5.2% year-over-year. This was mainly due to higher affiliate and advertising revenue. Operating cash flow from this segment was $46 million, down 17% year-over-year.

Corporate & Other Segment

Quarterly revenue from the Corporate & Other segment was $138 million, up 14.3% year-over-year. Operating cash flow from this segment was a loss of $110 million in the quarter, compared to a loss of $110 million in the year-ago quarter.
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