Comcast Corp. today 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.
First-quarter earnings were 17 cents per share, excluding the gain, compared to 15 cents a year ago.
Revenue rose 32 percent in the period, to $7.39 billion. Cable revenue rose 12 percent to $7 billion.
Wall Street had been expecting 17 cents per share on revenue of $7.36 billion, according to Thomson Financial.
The 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 by about $30.
Comcast reported big additions across all three business lines. The number of basic cable subscribers rose by 75,000. Digital cable subscribers increased by 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 3 million.
"Triple play really is changing the company, and it's the gift that keeps on giving, if you will," Comcast Chief Executive Brian Roberts said in a conference call with investors this morning.
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 share price has been almost flat this year because investors have been concerned that the company is spending too much to improve networks and add services.
Roberts said the first-quarter's growth numbers had proved that the capital expenditures are 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 said 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 were down 69 cents, or about 2.5 percent, to $27.40 in afternoon trading on the Nasdaq market.