Comcast Results Outshine TWC as Subscriber Losses Improve
Comcast (NASDAQ:CMCSA) reported its Q3 2011 earnings recently, beating analysts estimates and adding net 229,000 subscribers across all business. [1] While the company continues to get success in broadband, it is still losing subscribers in pay-TV business. However these subscriber losses improved vs. last year and are likely to continue improving going forward.
One interesting thing to note is that if we view subscriber losses relative to the size of the subscriber base, Comcast performed better than its cable rival Time Warner Cable (NYSE:TWC). Comcast’s loss of 165,000 video subscribers outshines Time Warner Cable’s loss of 126,000 subscribers in Q3 2011 since Comcast’s base is almost twice as large as Time Warner Cable’s. [2] Comcast is also having a greater degree of success at stemming subscriber losses than telcos such as AT&T (NYSE:T) and Verizon (NYSE:VZ), and with its several efforts revolving around improving customer service by experimenting with programming bundling plans to introduce IPTV service for PCs and Macs and investing in Xfinity service, it may be able to turn around this business in next couple of years.
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The analog base is shrinking, and as Comcast shifts all of its subscribers to digital platform, the subscriber losses will further reduce.
Our price estimate for Comcast stands at $26.60, implying a premium of little over 5% to the market price.
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