Comcast Earnings Double, but It Still Gets No Respect

Comcast (CMCSA) is the Rodney Dangerfield of media companies.

No matter what the world's largest cable company says or what it does, it gets no respect. That's even the case when, like yesterday, the Philadelphia-based firm reported that fourth-quarter earnings more than doubled. How did Wall Street respond? It sent Comcast's shares down. And they're trading down again today (along with the rest of the market). It's baffling to some observers."Comcast has executed extremely well in this environment," Christopher King, an analyst at Stifel Nicolaus & Co., who recommends buying the stock, told Bloomberg News.

Fourth-quarter sales rose 2.9% to $9.07 billion, as the company added voice and high speed-Internet customer while cutting costs. Net income soared to $955 million during the period, or 33 cents per share, from $412 million, or 14 cents, a year earlier. The results beat Wall Street expectations. Free cash flow increased 20.8% to $4.4 billion in 2009. To top it off, Comcast said it would begin paying a dividend and buy back as much as $7 billion worth of stock.

Chief Executive Brian Roberts, who is also working to gain control of NBC Universal from General Electric (GE), said the company was "particularly proud" of its accomplishments given the state of the overall economy.

Introducing "Xfinity"

Investors remain skeptical, however. Many are down on the cable industry and particularly wary of Comcast. Almost as many analysts (10) rate the stock as a hold as a buy or strong buy (15), The stock has gotten three downgrades since November. Investors were further rattled yesterday when Comcast said it would increase spending to retain customers.

Following the lead of others in the cable industry, Comcast plans to rebrand its cable products. It's using the Xfinity effective Feb. 12. Again, skeptics, who have longed derided the company's customer service, chimed in. "It also implies infinity, even though the company is now placing limits on subscribers' broadband consumption," writes Brier Dudley of the Seattle Times.

Questions also abound about the company's planned takeover of NBC Universal. Rep. Rick Boucher, chairman of the House Subcommittee on Communications, told Bloomberg News that he was concerned about the deal. "It's very important that there not be any diminution of availability of that content for those who are current users of it," he said. Indeed, Comcast and NBC Universal executives -- and their critics -- are testifying about the deal before the congressional committees today.
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