Comcast (CMCSA) shares are on the rise Thursday morning after the U.S.’s largest cable operator beat expectations for EPS on in-line revenue for its Q2. The company managed to beat analysts’ free cash flow projections as capital expenditures continued to decline despite the rollout of several interesting initiatives including wireless services and online video streaming.
Revenue for Q2 rose 4.5% to $8.94 billion, in line with analysts’ estimates, yielding profit per share of 33 cents, ahead of a 26-cent estimate. The company’s video revenue rose 2% based mostly on an increase in revenue per customer even as the company lost 214,000 basic video subscribers. Management remarked on the conference call this morning that given the rough economy, it was tough to sell new connections in April and May, though there was some pickup in June. Free cash flow of $1.2 billion was 16% above expectations, writes Sanford Bernstein analyst Craig Moffett in a note Thursday morning.
Aside from the decline in basic video subs, the company highlit the decline in ad revenue as the major point of concern in the quarter. Cable advertising dropped 20% in the quarter, and “we are not seeing any signs of recovery,” said CFO Michael Angelikas on the call. Advertising when measured per subscriber, was not as bad as expected, writes Moffett.
Of particular interest in the quarter was the company’s discussion of its new “4G” wireless mobile computing service, provided through Wimax operator Clearwire (CLWR). The service is up in Portland, Oregon and Atlanta, and expects to open service in Chicago, Philadelphia, and Washington State. The company also talked up its Web video streaming, which offers 4,000 titles to Comcast cable subscribers.
And the biggest news of the quarter was that the company resumed repurchase of its shares, something that was not expected till next year. Comcast spent $215 million on its stock in the quarter and pointed out there’s $3.9 billion left in its current repurchase agreement.
Comcast stock Thursday morning is up 23 cents, or 1.5%, at $15.29.