TV, internet and phone service giant Comcast reported today that its third-quarter profit fell 54 percent and new customer additions slowed, amid intensified competition. Shares dropped more than 7 percent in morning trading.
Comcast earned $560 million, or 18 cents per share, in the three months ended Sept. 30 compared with $1.22 billion, or 38 cents, in the same quarter a year ago. Revenue rose by 21 percent to $7.78 billion from $6.43 billion a year ago.
The decline also reflected a comparison with year-ago results that included $669 million in one-time gains related to Comcast's purchase of Adelphia's cable assets and a swap of cable systems with Time Warner Cable. Excluding these gains, Comcast would have seen profits rise by 2 percent from last year's $548 million in adjusted earnings.
Looking ahead, Comcast said it expects a softening economy, an accelerated exit from its circuit-switched phone business and increased competition to affect fourth-quarter results. Comcast said phone companies have ratcheted up promotions as they lose customers to Comcast's digital voice service. Satellite TV providers have done the same as consumers leave to snap up Comcast's discounted triple play package of video, Internet and phone.
For the third quarter, revenue generating units, a key measure of cable subscriber growth, fell 6.7 percent to 1.4 million. It is the first quarterly decrease in at least 3 1/2 years.
Comcast added 489,000 new digital video subscribers in the quarter, down 12 percent from last year, to 14.7 million customers. The number of digital video customers is a subset of basic subscribers, which fell by 65,000 to 24.2 million. A year ago, basic subscribers rose by 11,000. However, the company pointed out that 61 percent of basic subscribers have upgraded to digital, up from 50 percent a year ago.
Comcast attracted 450,000 new high-speed data customers, down 16 percent from a year ago, for a total of 12.9 million. As for its phone service, digital voice added 662,000 consumers, up 36 percent from last year, to 3.8 million. Comcast's circuit-switched phone service, which the company is exiting, lost 138,000 subscribers for a remainder of 304,000. High-speed data revenue fell, however, to $42.86 a month, from $43.29 a year ago, reflecting the bite from promotional Internet packages touted by the phone companies. (info from The Associated Press)