Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
Comcast Posts 7% Profit Rise Amid Strong Web-Phone Sales
Summary: Comcast Corp.'s Q2 results: Revenue up 11% to $6.23 billion, net income was $460 million versus $430 million a year earlier. EPS of 0.22 versus $0.19 a year earlier. Net new voice service subscribers were 227,000, including 306,000 new Internet phone subscribers versus 15,000 a year earlier, and a loss of 79,000 traditional voice subscribers. Comcast now forecasts 2006 new voice subscribers of 1.3-1.4 million versus its prior prediction of 1 million. Comcast also added 305,000 new cable Internet service subscribers, up from 300,000 last year. Average revenue per broadband customer was $43.78 during the quarter, up from $43.35 a year earlier.
Comment on related stocks/ETFs: Comcast's stock (NASDAQ:CMCSA) has performed well, despite the fact that Verizon and AT&T are taking share in the broadband market through aggressive pricing. Jim Cramer correctly points out that, unusually, both sides in this price war seem to be winning. The key for the future performance of the telco stocks -- Verizon (NYSE:VZ) and AT&T (NYSE:T) -- is the cable companies' voice rollout. Internet voice chat such as Skype, AOL Instant Messenger and Yahoo Messenger don't pose an immediate threat to the telcos, because most customers have unlimited-use monthly plans. That means that telco voice revenue is only threatened by line cancellations, not reductions in minutes used; and Skype isn't enough to get someone to cancel their regular phone line. The strong Comcast digital voice numbers, however, suggest that AT&T and Verizon now have something to worry about. Comcast's transcript is a must-read for anyone interested in the future of voice service; look particularly at Brian Robert's comments about the 45% sequential increase in Comcast's digital voice subscribers. On Comcast's stock (CMCSA), remember that the company will gain by the addition of systems acquired from Adelphia. Resources: press release, slide presentation in PDF, webcast of conference call (requires registration), full conference call transcript ("RGU" in the call refers to "revenue generating units"); more on Comcast's voice push from John Bethel.