Comcast Corporation (CMCSA): Focus on Business Services and Internet Service

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Comcast Corporation (NASDAQ:CMCSA) results for the first quarter will be keenly watched for different reasons. The results will come on the heels of the company abandoning its bid to buy Time Warner Cable Inc (NYSE:TWC), following the concerns raised by regulators on Comcast gaining undue advantage. The focus will be on how Comcast has taken its lead in business services further in the first quarter. This apart, high-speed internet and video subscribers additions will drive its results.

Key Factors

During the Morgan Stanley (NYSE:MS) investors’ conference in early March, Comcast Corporation (NASDAQ:CMCSA) Vice Chairman and CFO, Michael Angelakis talked to various analysts. He told them that business services provide a big opportunity for the company. He pointed out that they generated more than $700 million in revenue organically in 2014. On top of that, he said that the margins were terrific, pointing out some competitive edge it has with its network and the way it deploys its network.

The CFO told analysts that its cable business was well placed to continue its growth. However, he cautioned that the growth will not be in big numbers, since it is a large business. The company’s CFO said that there were plenty of opportunities around high-speed data, video, and business services. These opportunities are outsized and the company is deploying additional capital to tap those opportunities. He said that the company is deploying funds on potential new businesses.

Transformative

Comcast Corporation (NASDAQ:CMCSA)’s CFO said that it spent more on innovative products in the last four or five years on X1 high-speed business services. The objective is to achieve customer service through technology innovation. He pointed out that the customer experience will be different and transformative, but not incremental.

In the fourth quarter, the company’s results gained more from its cable communications segment. The division’s contribution to the total revenue was 63.8% in the December quarter, driven by 6.1% growth in revenue.

On the other hand, NBC Universal delivered a 2.3% uptick in revenue in the fourth quarter. However, its contribution to the total revenue dipped to 37.3%, from 38.2%. Within the cable segment, it was high-speed internet, business services, and advertising that recorded significant growth of 9.9%, 20.8% and 18.9% respectively.

What To Expect

Given the comments made by Comcast Corporation (NASDAQ:CMCSA)’s CFO during the analysts’ conference in March, the company should have witnessed continued growth in its three key segments. However, despite growing, the company’s earnings failed to meet the Street expectations in the fourth quarter.

For the March quarter, Street analysts are estimating the company to deliver earnings of 74 cents a share and $17.39 billion in revenue. They are predicting an EPS uptick of 4.2%, despite estimating the revenue to slacken ten basis points. In the previous year quarter, the company earned 71 cents a share and $17.41 billion revenue. There has been no revision in EPS estimations among the analysts in the last two months.

Except the fourth quarter, Comcast Corporation (NASDAQ:CMCSA)’s earnings topped the estimations in the preceding three quarters. The company will disclose its financial numbers on May 4 before the bell.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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