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Stock of the Day
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Comcast (CCT)
Comcast Brightens the Picture on its Profits
The Comcast Corporation (CCT: Charts, News, Offers) reported a 22 percent increase in profit for the quarter. The media cable giant beat out Wall Street's expectations despite a dynamic industry environment. Comcast faced several strategic challenges throughout the quarter. The largest U.S. cable provider dealt with increasing competition from rivals, a sub-bar economic climate, and a floundering housing market. However, Comcast managed to escape all these conditions with a better-than-expected outcome. How was Comcast able to overcome these obstacles during the quarter?
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The biggest problem for Comcast recently has been its declining service subscriber list. The shaky economy and increasing outside competition from Verizon (VZ: Charts, News, Offers) and AT&T (ATT: Charts, News, Offers) has made it very difficult for Comcast to expand its customer base. After a lackluster second quarter list performance, Comcast decided to launch an intensive promotional activity campaign during the third quarter to help entice customer signups. The promotional effort managed to slow down the subscriber list decline, but did not solve it. In addition, the stagnant housing market has not provided the usual "new home" subscribers as it once did. Despite its best efforts, Comcast's high-speed internet and video subscriber list continues to dwindle. If Comcast was unable to fix its subscriber list growth problem, how did its profit jump so high?
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Comcast may have struggled with adding subscribers, but it was very successful with maximizing the potential of its current customers. First, Comcast increased prices for its service offerings. The price adjustments helped fill the revenue gap left by its dropped subscribers. Second, the cable titan worked hard to upsell its current customers to more premium service packages. Comcast was able to increase the average revenue per customer, which has helped its bottom line. The one-two combination of increased service rates and scope of service for Comcast's current customers was pivotal to its impressive profit increase.
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It appears that Comcast is in good shape. The Comcast Corporation has managed to increase profit despite declining service subscribers and a tough economy. Comcast was very successful with its increased pricing strategy, and even saw some of its current customers expand their service offerings. The pricing adjustments and increased customer spending were the primary factors behind the boost in quarter profit. However, the largest U.S. cable provider cannot rely on price increases as a long term strategy to generate profit. Comcast still needs to solve its shrinking subscriber list problem, which is essential to its current business model. Overall, the Comcast Corporation is hoping to remedy its subscriber list woes and pull the plug on the competition.
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Other Stuff Related to Comcast:
Many Customers Unhappy with Comcast's Latest Rate Hikes -- A real-life look at the Comcast pricing increase implementation.
Comcast Faces Stiff Competition -- A blogger's breakdown of Comcast's strategy to combat increased competition from rivals.
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More Stocks in the News:
Time Warner sees brighter future -- Time Warner's (TWX: Charts, News, Offers) profit fell 38% for the quarter. So what is so bright about the future?.
The Mouse's Surprise Hong Kong Rival -- Disneyland (DIS: Charts, News, Offers) opened up in Hong Kong nearly four years ago. How has the American entertainment juggernaut been stacking up against the local compeititon?
Cost Cuts, Tax Gains Boost Molson Coors. -- Molson Coors (TAP: Charts, News, Offers) taps into higher profits. How did the brewery giant do it?
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Click here to view a detailed profile of Comcast.
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