Comcast added fewer Internet and video customers than expected in its third quarter.
The cable giant on Thursday reported net income of $560 million, or 18 cents a share, on revenue of $7.78 billion. Those results were in line with estimates, but the big worry was its subscriber totals. Comcast added 489,000 new digital cable subscribers and 450,000 high speed Internet access subscribers.
The rub: The 450,000 Internet access subscribers were down from 538,000 a year ago. Morgan Stanley was projecting Internet additions of 533,000 in the quarter. Comcast's video additions were roughly in line with expectations. Comcast voice subscribers were 662,000 in the quarter, below Merrill Lynch's estimate of 725,000.
Comcast also cut its cash flow outlook and noted that "the more competitive environment and less-robust economy may have a slight impact on our full year operating results."
So what's going on here? Two words: Verizon and AT&T.
AT&T reported a jump in high-speed Internet connections from a year ago. Part of the reason for this bump is that DSL service is cheaper for price conscious consumers (a slowing economy may make DSL more popular). Another factor is AT&T's U-verse rollout, which is dinging cable providers on the TV front.
On the Verizon front, the company is likely to note big growth in FiOS TV and Internet subscribers. Verizon reports its third quarter results on Monday. Morgan Stanley is expecting Verizon to post solid gains on FiOS and Verizon Wireless. A decrease in DSL and phone line subscribers is a worry. Overall Verizon is expected to report earnings of 62 cents a share, according to Thomson Financial.
But so far it's clear the cable giants are taking some heat. On Comcast's home turf--the Philadelphia area--Verizon is gaining some momentum. And with new services like Verizon's 20/20 plan that growth is likely to continue.