Investors had to use a scorecard this morning when Comcast (NASDAQ:CMCSA) made two major announcements that will affect the communications industry in the coming months.

The big immediate news was Comcast's withdrawal of its $48.4 billion hostile takeover bid to acquire Disney (NYSE:DIS). Mickey Mouse's huge ears must have been burning when the largest domestic cable television company backed away from what could have been a bitter fight.

The other quieter but just as important news from Comcast was its first-quarter earnings announcement. The cable giant earned $0.03 per share versus a loss last year of $0.13, but the results were about $0.04 short of expectations. The good news is that cable revenues were up nearly 10%, and high-speed Internet revenues were 42% higher.

All of today's activity might put Comcast in a catch-22 position. The company's operations produce so much green that they could set up a machine and program it to accept PIN numbers. With Comcast expecting to produce in excess of $2 billion in free cash flow in 2004, money will available for the company to make another pass at an acquisition or to repurchase some of its own shares.

However, Comcast runs the risk of making an acquisition simply to make an acquisition. What I mean by this is that it must choose a company that is a good fit and will provide both cost savings from operating synergies and additional revenue-generating opportunities.

I don't think that Comcast is in a unique position with its ever-flowing cash stream. Competitors such as Cablevision Systems (NYSE:CVC) and Cox Communications (NYSE:COX) are in similar enviable cash positions. The danger in scooping up another cable company like the floundering Adelphia Communications is that it would represent, at best, a lateral move.

A potential strategy for the cable companies would be to save up their cash and wait for an exciting entertainment industry purchase to materialize. Of course, with so much competition to spend the almighty dollar, any acquisition idea would be as unique as promising to go on a diet as a New Year's resolution.

If you want to chat about Comcast, please check out the Comcast discussion board.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.