Being a loyal subscriber of EchoStar's (NASDAQ:DISH) Dish Network satellite service, it comes as no surprise to me that leading cable television operator Comcast (NASDAQ:CMCSA) has been fighting to keep its customer base.
With leading satellite providers Dish Network and DirecTV (NYSE:DTV) attempting to gobble market share -- via pricing and perks -- at the pace of contestants scarfing down hot dogs in a Nathan's contest, competition is definitely lively in the satellite and cable television industry. At least the consumer benefits: I'll say I have also been enjoying Sirius Satellite Radio (NASDAQ:SIRI) on my Dish Network service so much that I'll probably be purchasing the commercial-free service for my car.
Of course, cable television operators such as Comcast are still fairly strong and will not be going away anytime soon. The company's revenues advanced a decent 10.6%over the same quarter last year; basic cable subscriber additions of 8,500 (which includes 10,000 subscribers lost, albeit presumably temporarily, because of hurricanes) turned around a loss of nearly 96,000 customer in the second quarter, but the number was more than 40% lower than analysts' expectations. For perspective, basic subscribers number 21.5 million. Comcast also added 341,000 digital cable customers to its subscriber base of 8.4 million.
The red flag in Comcast's third-quarter results came from costs associated with increased expenses related to video and Internet marketing and related operating expenses. The company's earnings of $0.10 per share were a penny lower than the average consensus estimate but ahead of last year's $0.07-per-share loss (excluding the $1.48 per share gain from the sale of QVC).
Comcast continues to add a record number of high-speed Internet subscribers -- 549,100 signed up in the third quarter, lifting the subscriber base to 6.6 million. The company also reaffirmed its guidance for 2004: revenue growth of 10%; operating cash flow of $7.5 billion, up 18%; digital cable subscriber net additions of 1 million (upper end of previous guidance); high-speed Internet subscriber additions of 1.6 to 1.7 million; and consolidated free cash flow of $2 billion.
The company's shares, which are trading at 43 times the 2005 earnings estimate of $0.67 per share, appear to be attractive relative to its 76% analyst-estimated earnings growth rate next year. While I am impressed with the company's earnings turnaround, I am still wary of the lasting impact the satellite providers will have on the competitive landscape.
Turn off the television for a few minutes and click on these other Takes:
Fool contributor Phil Wohl spent more than 12 years on Wall Street and appreciates the digital sound and picture quality coming from the sky. He does not own shares of any of the companies mentioned.
