updated 5/1/2008 11:20:53 AM ET 2008-05-01T15:20:53

Promotional offers and higher cable television spending fueled the first-quarter profits of Comcast Corp., which showed limited effects from an economic slowdown.

The nation’s largest cable operator posted a 12.5 percent decline in profits, but it was mainly due to one-time gains from the dissolution of cable partnerships. Excluding those gains, earnings actually rose by 9.5 percent.

Comcast also confirmed its financial outlook for 2008 despite economic headwinds.

“Investors had started to question how resilient the Comcast business would be in the face of macroeconomic weakness,” said Craig Moffett, senior analyst at Sanford Bernstein. “I think the first-quarter results put most of those concerns to rest.”

Comcast was able to deliver because of its diversified business, Moffett said. As consumers pinch pennies, for example, they might pull back on pay-per-view purchases but sign up for digital phone service with unlimited domestic calls at a set price.

In a conference call with analysts, Comcast executives said aggressive marketing, focused promotions and added flexibility to credit and collections boosted business.

Philadelphia-based Comcast posted net income of $732 million, or 24 cents per share, compared with $837 million, or 26 cents per share, in the quarter a year ago.

Excluding one-time gains, Comcast said quarterly profits were $588 million, or 19 cents per share, compared with $537 million, or 17 cents, last year.

That matched the average expectation of analysts surveyed by Thomson Financial.

Comcast had a $144 million gain in the quarter after it split a joint venture cable partnership with Insight Communications Co. Comcast received cable systems in Illinois and Indiana. Last year, Comcast posted a $300 million gain from the dissolution of a cable partnership with Time Warner Cable Inc., in which Comcast received cable systems in Houston.

Revenue was up 14 percent to $8.39 billion in the latest quarter. Analysts were expecting $8.17 billion.

Operating income was up 23 percent to $1.55 billion while free cash flow — an important indicator for typically debt-laden industries such as cable — soared by 59 percent to $702 million.

“We’re off to a solid start,” said Chief Executive Brian Roberts.

This year, the company said it plans to switch more analog channels to digital with the bandwidth reclamation plan affecting 20 percent of its market by year’s end. Its ultrahigh speed Internet, known as Docsis 3.0, should also be available in a fifth of Comcast markets in 2008.

As for wireless, Roberts all but quashed notions Comcast would purchase a cell phone company.

Instead, the question is “down the road should we extend services outside the home? To that end, we hired some folks to help us in our wireless thinking,” he said.

The slowing economy did affect sign-ups: Comcast added 1.46 million lines of video, phone and Internet services in the quarter, down 20 percent from a year ago.

Customers spent an average of $63.46 for cable TV, up from $59.97 in 2007’s first quarter. Cable TV revenue rose by 5 percent to $4.71 billion.

For Internet service, where Comcast faces more competition, customers spent an average of $42.18, down from $43.08. Revenue for this business rose by 12 percent to $1.75 billion.

For digital phone service, subscribers spent $40.24, down from $42.44. Revenue, however, more than doubled to $573 million as the company siphoned customers from phone companies.

Looking ahead, Comcast expects an 8 percent to 10 percent increase in revenue and operating cash flow.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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