When he announced his company's third-quarter results in October, Comcast (Nasdaq: CMCSA ) CEO Brian Roberts predicted that its fourth quarter would be as strong or stronger than its solid predecessor. It seems, from what I know of the company and from Roberts' comments earlier this week at the Citigroup Entertainment, Media, and Telecommunications Conference in Las Vegas, that he probably could make a similar statement about 2007 and 2006.
It would hardly be trivial at Comcast if the company could meaningfully ramp up 2007 above 2006. Last year saw the introduction of the fully fleshed-out "triple play" offering of digital video, high-speed data, and voice over Internet protocol in most of the company's markets. Adherents were attracted to the package in droves, the subscriber base swelled to more than 24 million, and perhaps most important, the company's share price finished the year about 55% higher than it had been when the year began.
But Roberts has a plan for maintaining growth. His approach will involve the targeting of small businesses -- those with fewer than 20 employees -- for the company's telephone and data services. He believes that there is "very little or no competition" for this market; that about 3 million such businesses are within a stone's throw of Comcast's service area; and that the result could be an incremental $12 billion to $15 billion in revenues over the next several years. And beyond the first two services, Roberts envisions that some of the businesses will take video as well.
This is not to say that residential triple play deployments are slowing. Quite the contrary: In the third quarter, the company signed on more than half a million subscribers each to the video and data services, and its new VoIP telephony offering lured 483,000 subscribers to the company. Unlike some other cable operators, Comcast eschewed circuit-switched telephony and waited until the digital product was fully dependable before offering a voice product, so the bundled three-service offering is still very new at the company.
With Roberts at the helm, and with an unusually solid crew behind him, Comcast has grown its subscriber base fourfold during this decade. It is now larger than Time Warner's (NYSE: TWX ) cable unit, Charter (Nasdaq: CHTR ) , and Mediacom (Nasdaq: MCCC ) -- the three other public cable operators -- combined. Now growth is slowing ever so slightly for the satellite providers, and telephone companies Verizon (NYSE: VZ ) and AT&T (NYSE: T ) are way behind cable in their ability to offer a competitive triple play product.
Or are they? My wife and I had dinner with friends recently, and their first announcement was that they had fired our (non-public) cable provider in favor of subscribing to Verizon's package. But then, Roberts et al run their ship unusually effectively, and are not likely to be blindsided by emerging competition from the telephone companies. Further, they now have a new market in their sights. These facts, among others, drive me to urge Fools to keep a close eye on Comcast in 2007 and beyond.
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