Broadband service company MediaOne Group today reported that its revenues increased 16 percent to $1.8 billion for the third quarter, helping the company beat Wall Street's earnings expectations.
Shares of MediaOne, a firm often rumored to be a takeover-target by cable and telephone companies, jumped higher on the news in morning trading. The stock was up 1.32 percent to 43.06, and has traded as high as 50.13 and as low as 25 during the past 52 weeks.
Analysts have speculated that MediaOne is one of the only attractive merger partners remaining for any major telecommunications outfit that wants to be a player in the coming convergence of personal computers and television.
Although sales fell 36 percent to $626 million, the company showed a 32 percent increase in proportionate operating cash flow. MediaOne posted a loss of 32 cents per share, managing to beat the consensus of Wall Street analysts who pegged its loss at 35 cents per share, according to First Call.
The company said that since the end of the second quarter, it has launched new services in five U.S. cities, offered a new video packaging concept, and added more than 14,000 new high-speed Internet customers. The company said it is enjoying strong customer growth in its international businesses.
"This has been another terrific quarter for MediaOne Group," said chairman and CEO Chuck Lillis in a statement. "In the U.S., we're rolling out high-speed Internet, telephone, advanced analog, and digital video services."
In the United States, pro forma broadband revenue was up 11.6 percent for the quarter. Pro forma core cable operating cash flow was $263 million, an increase of 6.5 percent over the same quarter last year.
For the quarter, MediaOne Group's share of Time Warner Entertainment revenues was $822 million, up 12.9 percent over third quarter 1997. MediaOne owns a nearly 35 percent proportionate interest in a high-speed Internet joint venture with Time Warner, Microsoft, and Compaq. With Time Warner's 73,000 Road Runner customers and MediaOne's nearly 55,000 MediaOne Express customers, the joint venture is one of the largest high-speed Internet services.
Analysts have speculated that Microsoft CEO Bill Gates and investor and Microsoft cofounder Paul Allen were possible MediaOne buyers. The Gates scenario is less likely at this time because of the antitrust investigation of Microsoft by the Justice Department.