Comcast Net Climbs, But Outlook Is Murky

Comcast Corp. posted a 38% rise in third-quarter profit despite a slowing economy and increased competition, but the cable provider warned that broader conditions were taking a toll on business and said it is bracing for tougher times ahead. It seams that comcast needs to invest in
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Comcast also said it may not complete its share-repurchase plan by the end of 2009 as previously indicated, given the turmoil in the credit markets.

The largest U.S. cable operator by subscribers reported net income of $771 million, or 26 cents a share, compared with $560 million, or 18 cents a share, in the same period a year ago. Revenue grew to $8.55 billion from $7.78 billion last year.

Boosted by a drop in capital spending, free cash flow surged 77% to $928 million and the company said it expected to exceed its prior forecast for the year.

Shares of Comcast dropped 9.3% to close at $15.38 in 4 p.m. trading on the Nasdaq Stock Market Wednesday, following a 25% run-up the day before.

In a conference call for investors Wednesday, Comcast executives said customers were more hesitant to pay more for premium services, and more likely to use cellphones rather than buy the company's digital phone service because of the slumping economy. Comcast added 483,000 phone customers over the quarter, down from 681,000 a year ago.

Comcast Chief Executive Brian Roberts also said the company was seeing growing competition from phone companies like Verizon Communications Inc. and AT&T Inc., which are in the process of building out their own pay TV services. Comcast lost 147,000 basic video subscribers over the quarter, compared with a loss of 56,000 a year ago.

The growth of broadband services remained strong. The company added 382,000 customers over the quarter, down from 474,000 a year ago -- but more than the combined broadband additions at phone rivals Verizon, AT&T and Qwest Communications International Inc.

Comcast executives plan to press their advantage in broadband services in response to the changing economic conditions. The company is rolling out a new, super-fast service as well as more aggressively pushing a slower, cheaper service for cost-conscious customers.

Write to Vishesh Kumar at vishesh.kumar@wsj.com