Comcast counting on business services for cable growth

Comcast's efforts to grab a chunk of the business services market from the bottom up appears to be paying off as its enterprise business approaches an annual run rate of $4 billion.

The cable giant reported first quarter earnings Tuesday and the second largest contributor to its cable revenue was business services.

According to Comcast, business services revenue was $917 million, up 23.9 percent from a year ago. Comcast now has about 20 percent of the small business market and 5 percent share among mid-market companies. Larger enterprises are typically the domain of AT&T and Verizon.

On a conference call, Michael Angelakis, chief financial officer of Comcast said:

This growth is impressive considering business services is now approaching a $4 billion run rate business. Our share continues to grow, but we have only captured about 20% of the small end of the market and about a 5% share of the midsize business segment. Our optimism here continues as Business Services represents a large and attractive opportunity for the company.

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Comcast is a sprawling giant that delivered earnings of 71 cents a share in the first quarter on revenue of $17.41 billion. Adjusted earnings were 68 cents a share, four cents better than estimates. First quarter sales were pumped up by NBC Universal's Olympics coverage and the advertising that went with it. Comcast is trying to acquire Time Warner Cable to expand its footprint in the residential and business markets much to the chagrin of companies like Netflix.

While business services is a smaller chunk of Comcast, the company is counting on it to boost profit margins and growth. To wit:

• Video revenue in the first quarter only grew 1.3 percent. 
• High speed Internet revenue was up 9 percent in the first quarter. 
• Voice grew at a 2.1 percent clip. 
• And cable advertising was up 6.2 percent.

Relatively speaking, Comcast's enterprise unit outruns all the others in the company and has plenty of market share to grab. That growth will come in handy as Comcast video customer count was flat compared to a year ago.