Comcast's profit soars 80 percent

Comcast Corp. yesterday reported first-quarter net income of $837 million, a gain of 80 percent from a year ago, bolstered by a $300 million after-tax gain and strong growth in new customers.

Excluding the gain, first-quarter earnings were 17 cents a share, compared with 15 cents a year ago.

Revenue rose 32 percent to $7.39 billion. Cable revenue rose 12 percent to $7 billion.

Wall Street had been expecting a profit of 17 cents a share on revenue of $7.36 billion, according to Thomson Financial.

The after-tax gain stemmed from the dissolution of a partnership with Time Warner Inc. in Texas and Kansas City.

The company added 1.76 million revenue-generating units in the first quarter, a 63 percent jump from a year ago. A revenue-generating unit, or RGU, represents a service bought, so a customer who bought cable, phone and Internet service from Comcast would count as three RGUs.

Company executives attributed the RGU growth to the popularity of their triple-play package, which offers cable, high-speed Internet, and phone service at an introductory rate of $99 a month for one year.

So far, triple-play customers have been less likely to leave Comcast than digital-cable customers, even after the introductory rate expires and monthly bills rise about $30.

Comcast reported big additions across all three business lines. The number of basic-cable subscribers rose 75,000. Digital-cable subscriptions increased 644,000 in the quarter, a record.

The company added 563,000 high-speed Internet subscribers, up 10 percent from a year ago, and a record for the company.

Comcast also added 478,000 total phone subscribers, bringing total phone customers to three million.

"Triple play really is changing the company, and it's the gift that keeps on giving, if you will," Comcast chief executive officer Brian Roberts said in a conference call with investors yesterday.

Total revenue per cable customer rose from $86.18 a year ago to $96.39 in this year's first quarter because digital subscribers buy services such as digital video recorders and video-on-demand movies.

Comcast's share price has been almost flat this year because investors have been concerned that the company was spending too much to improve networks and add services.

Roberts said the first quarter's growth numbers had proved that the capital expenditures were paying off.

Craig Moffett, an investment analyst with Sanford C. Bernstein & Co., agreed.

"If fourth-quarter results were all about the spending, first quarter's were all about the return," Moffett wrote in a note to investors. "Overall, the results closely hew to our thesis of accelerating - and above-consensus - unit [and revenue] growth throughout 2007 and, particularly, 2008."

Comcast reaffirmed its expectations for the rest of 2007, predicting 11 percent revenue growth. Roberts noted that the company has traditionally not changed forecasts in the first quarter, because it is so early in the year.

Shares closed yesterday down 99 cents, or 3.5 percent, at $27.10 in Nasdaq trading.

For Comcast's first-quarter earnings report, go to http://go.philly.com/ Comcast1QEndText