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Comcast meets Street forecasts

The giant cable operator reports that its consolidated operating cash flow increased 15.3 percent from one year ago.

Giant cable operator Comcast today reported that its consolidated operating cash flow for the third quarter increased 15.3 percent to $420.7 million from the $365 million reported in the year-ago quarter, meeting cable analysts' expectations.

Unlike other industries, analysts said, the cable industry looks at cash flow rather than earnings per share to gauge the health of a company.

The company posted operating cash flow from its cable operations of $277.2 million with a operating cash flow margin of 48.5 percent.

"We look first at their cable cash flow which they hit right on the nose," said Charles Simonds, an analyst at Salomon Smith Barney. "They had continued strong operations which made a very strong margin at 48.5 percent."

Simonds said that his company's thesis on cable companies is that their margins are going to come under pressure next year, getting "hit with much higher programming costs."

"Comcast managed to maintain a strong margin from its previous quarter which is very good considering our thesis," he added.

Comcast, the fourth-largest domestic cable company serving approximately 4.5 million customers, said it posted consolidated revenues of $1.36 billion, a 12.5 percent increase from the $1.204 billion reported in the year-ago quarter.

Comcast's third quarter 1998 results include the financial results of several companies it acquired this year, including a cable system in Broward County, Florida that it acquired from Jones Intercable on March 31 and the Delaware/Maryland cable systems acquired from Marcus Cable on April 1, 1998.

Results for the quarter exclude Comcast's Primestar operations.

"The third quarter is highlighted by cable's success in delivering unique and desirable digital video and Internet services to the marketplace," Comcast president Brian Roberts said in a statement. "From a nominal base of customers at the beginning of the quarter, the digital service reported 27,700 customers at the end of the third quarter and now has over 50,000 customers."

The company also reported that the number of customers using Comcast@Home's high-speed cable modem service grew to more than 41,000 from 35,700 customers.

Including the results of the Jones and Marcus cable system acquisitions, the cable division revenues for the quarter were $571.7 million, representing a 9 percent increase from the $524.7 million for the same period in 1997. Operating cash flow for the quarter was $277.2 million, an increase of 10.1 percent more than the $251.9 million for the year-ago quarter.

Comcast is involved in the development, management, and operation of broadband cable networks, wired and wireless telecommunications systems. The company also provides content through its majority-owned subsidiaries, including QVC and E Entertainment Television.