Comcast buying back $2.5B in stock, calling it undervalued

Believing its stock is undervalued after the collapsed bid for Time Warner Cable Inc., Comcast Corp. has added $2.5 billion to its share-buyback program in 2015 - for a total projected buyback this year of $6.75 billion - and CEO Brian Roberts says the Philadelphia company's focus will be to run its existing cable, Internet, and entertainment businesses.

"We firmly believe the stock is undervalued," Comcast's chief financial officer, Michael Angelakis, told Wall Street analysts during a conference call Monday on the cable giant's first-quarter earnings. Public companies buy back their shares when think they are bargains and to raise future per-share earnings.

Comast also reported that Internet subscribers surpassed cable-TV subscribers for the first time in the last month, signaling how the online world was increasingly the communications gateway into U.S. homes and threatened the legacy cable business.

At the close of trading Monday, Comcast's stock was up 0.37 percent to $58.78, after jumping 2.4 percent, or $1.39, to $59.80 in pre-market trading after the call.

Addressing the now-dead Time Warner Cable transaction, Roberts said that Comcast thought it could bring superior products to TWC cities, but that "the government didn't see it that way."

Comcast abandoned the deal April 24 after regulators with the Justice Department and the Federal Communications Commission told Comcast executives they opposed it because it could threaten online streamers such as Netflix.

"Really, really, we have moved on," Roberts said.

Investors are speculating what the deal-hungry Comcast will do, as it appears blocked from major cable acquisitions in the U.S.

"I do not know what is or is not possible," Roberts said, later adding "we don't have any new news or focus today."

Some believe that Comcast could expand internationally, through its entertainment subsidiary NBCUniversal, or that it could acquire a wireless company.

Roberts said Comcast's first-quarter results showed strong execution in its existing portfolio of businesses. The company reported a 7.2 percent gain in revenue in the first quarter - when excluding advertising associated with last year's Sochi Olympics and this year's Super Bowl - and financial momentum at NBCUniversal, particularly the Universal theme parks.

Revenue in the first quarter, excluding the Olympics and Super Bowl, was $17.5 billion compared with $16.3 billion in the year-ago period. When those big events are included into Comcast's revenue line, the numbers were $17.9 billion in this year's quarter and $17.4 billion a year ago.

Net income rose to $2.1 billion from $1.9 billion. Per-share earnings jumped to 81 cents from 71 cents.

Theme-park revenue rose 34 percent to $651 million in the first quarter, and profit soared 54.6 percent to $263 million. Since acquiring NBCUniversal in 2011, Comcast has invested hundreds of millions of dollars in new attractions and hotels at the Florida and California parks. Bank of America analyst Jessica Reif Cohen has said she had not seen theme-park growth like it at any other company.

Said Steve Burke, the head of NBCUniversal: "We see theme parks as a very big and very important part of the company." Attractions for the theme parks could be spun out of the Universal film studio, he said, adding that he believed Comcast could add "many more" hotel rooms to its parks, which would boost park ticket sales.

In the cable division, Comcast shed 8,000 TV subscribers in the first three months of 2015. A year ago, it had added 24,000 TV subscribers.

It was a different story with the high-speed Internet business. There, Comcast added 407,000 Internet subscribers in the first quarter, compared with 383,000 added during the same period in 2014.

Neil Smit, cable division CEO, said that in recent weeks the total number of high-speed Internet subscribers for the first time exceeded the number of cable-TV subscribers. Both stand at about 22.4 million, with TV rolls slowly declining and Internet rolls growing briskly.

Federal regulators nixed Comcast's $45 billion acquisition of Time Warner Cable because of what it viewed as Comcast's market power in the high-speed Internet business.

Comcast reported its first-quarter earnings early because many of its executives, including Roberts, are attending the cable industry's annual trade show in Chicago, which runs through Wednesday. Roberts told analysts at the show this year that Comcast intended to make announcements involving customer service.