Comcast resumes dividends as profit rises

eHDMI

Comcast Corp (CMCSA.O) said on Thursday it would resume annual dividend payments and set a 2009 target to complete its $7 billion stock buyback program, addressing investors' demands to boost its beleaguered share price.

The top U.S. cable operator's shares rose 8 percent after it also reported a 54 percent rise in fourth-quarter profit and an increase in digital video, broadband Internet and phone subscribers.

The moves by Comcast, which also committed to reduce capital spending as a percentage of revenue, and the overall tone of executives on a conference call pleased the most vocal critic among its shareholders.

"The important thing is they said the right things, they're focused on the right things to create value for shareholders," said Chieftain Capital Management's Glenn Greenberg, who had in January called for the ouster of Comcast Chief Executive Brian Roberts.

"Now it's up to them to continue to do it for a very long time," Greenberg said in a phone interview. Chieftain holds about 2 percent of Comcast shares.

Comcast set its annual dividend at 25 cents per share, totaling about $750 million, and will pay a quarterly installment on April 30. The company, whose last dividend payment was in March 1999, said the payout would rise over time.

At Wednesday's close, Comcast's shares had lost 39 percent of their value from a high set last July, as subscriber growth slowed due to a weaker U.S. economy and increased competition from phone and satellite companies.

Faced with criticism from shareholders demanding better returns, Comcast ramped up its share buyback in the fourth quarter to $1.25 billion, compared with about $447 million a year earlier.

"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."

By putting a defined timeline on the buyback and repurchasing $1.25 billion in the fourth quarter, Moffett said, the company clearly signaled its confidence in future cash flow prospects.

OUTLOOK SEEN CONSERVATIVE

Net income for the fourth quarter rose to $602 million, or 20 cents per share, from $390 million, or 13 cents per share, a year earlier. The results were 2 cents per share higher than the analysts' average forecast, according to Reuters Estimates.

Operating cash flow, the change in the company's net cash position, rose 19 percent to $3.08 billion.

Revenue increased 14 percent to $8.01 billion, compared with analysts' estimates of $7.94 billion.

Goldman Sachs called the results "mediocre," as the company attracted fewer new customers, but generated strong growth in free cash flow, the amount of money left after all expenses and capital expenditures.

Comcast said it had lost 94,000 basic video subscribers, while adding 523,000 for digital video, 331,000 for broadband and a net 475,000 for phone service.

The company said it expected full-year 2008 consolidated revenue and operating cash flow growth of 8 percent to 10 percent, with consolidated capital expenditures falling to 18 percent of revenue.

Consolidated free cash flow growth is expected to rise at least 20 percent above 2007's $2.3 billion.

Analysts said the outlook was conservative. Goldman Sachs analyst Ingrid Chung estimated Comcast would be paying out some 30 percent of its 2008 free cash flow to shareholders.

CEO Roberts responded to market rumors by saying the company would not enter a bidding war with Microsoft Corp (MSFT.O) for Yahoo Inc (YHOO.O). Nor is Comcast interested in Sprint Nextel Corp (S.N) or other major acquisitions.

"We are committed to remaining disciplined," Roberts told analysts on a conference call. "To be clear, we are not spending any time on any of the large transformative acquisitions that have been speculated about like Yahoo or Sprint."

Comcast shares rose $1.24, or 6.96 percent, to $19.05 in Nasdaq trading. In comparison, Time Warner Cable Inc (TWC.N) rose 2.89 percent to $25.25 on the New York Stock Exchange.

On Wednesday, Comcast founder Ralph Roberts relinquished his salary of about $1.85 million for 2007. He is currently an adviser to his son, CEO Brian Roberts.

Source

__________________
Discount HDTV Accessories
HDFury