Comcast Corp said on Thursday it will pay an annual dividend and set a 2009 target to complete a $7 billion stock buyback program, two actions aimed at addressing investor demands to boost its share price.
Shares of the largest U.S. cable operator jumped 6 percent in pre-market trading after it also reported quarterly earnings that beat Wall Street expectations by 2 cents a share.
“Investors were desperate for a sign that this company is ready to return cash to shareholders,” Bernstein Research analyst Craig Moffett said. “They got that in spades today.”
He added, “By putting a defined timeline on the buyback and buying back $1.25 billion in the fourth quarter, the company has clearly signaled their confidence in the future cash-flow prospects of the business.”
Comcast said it will pay an annual dividend of 25 cents per share, payable on April 30, 2008. The company also said it will complete its $7 billion buyback by the end of 2009.
Shares of Comcast have lost more than a third of their value since a high last July on a slowdown in adding new subscribers from increased competition from phone and satellite rivals and the impact from a weaker economic environment.
That’s why the company, which faced criticism from some of its shareholders who have demanded a better payout, ramped up its share buyback in the fourth quarter. Comcast repurchased $1.25 billion worth of its stock, compared with about $447 million in the same period a year ago.
Comcast reported a 54 percent rise in fourth-quarter net profit to $602 million, or 20 cents per share, from $390 million, or 13 cents per share, a year earlier.
Revenue rose 14 percent to $8.01 billion.
Wall Street expected Comcast to post a profit of 18 cents and revenue of $7.94 billion, according to Reuters Estimates.
Comcast lost 94,000 basic video subscribers but added 523,000 digital video subscribers, 331,000 broadband customers and 475,000 net phone subscribers in the fourth quarter.
Quarterly operating cash flow rose 19 percent to $3.08 billion.
The company said it expects full-year 2008 consolidated revenue and operating cash-flow growth of 8 to 10 percent. Consolidated capital expenditures as a percent of revenue is expected to fall to 18 percent.
Consolidated free cash-flow growth is expected to rise at least 20 percent above 2007’s $2.3 billion.
Comcast founder Ralph Roberts on Wednesday relinquished his salary of about $1.85 million in 2007, opting to be paid $1 per year. He currently serves as an advisor to his son, Chief Executive Brian Roberts.