Comcast, Pressured by Holders, Sets Buyback, Dividend

Comcast, Pressured by Holders, Sets Buyback, Dividend

Feb. 14 (Bloomberg) -- Comcast Corp., the cable-TV operator pressured to boost investor returns, said it will buy back $6.9 billion of its stock over two years and pay its first dividend in almost a decade, sending the shares higher in early trading.

Fourth-quarter net income rose 54 percent to $602 million, or 20 cents a share, from $390 million, or 13 cents, a year earlier, Philadelphia-based Comcast said today in a statement. Profit beat the 17-cent average of 17 analysts' estimates compiled by Bloomberg. Sales gained 14 percent to $8.01 billion.

The buyback and annual dividend of 25 cents followed criticism from investors including Chieftain Capital Management Inc., who said Comcast's acquisitions and capital spending were excessive. Last month, Chieftain called for Comcast to reward shareholders and oust Chief Executive Officer Brian Roberts.

``Investors had been looking for a return of cash,'' Sanford C. Bernstein & Co. analyst Craig Moffett said in an interview on Bloomberg Radio. ``That signals confidence from the management that they really do believe that capital intensity is going to fall. We got that this morning in a big share repurchase.''

Moffett, based in New York, rates the stock ``outperform.''

Comcast rose $1.29, or 7.2 percent, to $19.10 in early trading before the U.S. markets opened. The stock rose 58 cents to $17.81 yesterday in Nasdaq Stock Market trading and has declined 35 percent in the past year.

Estimates

This year, Comcast projects sales and operating cash flow will increase 8 percent to 10 percent. Capital expenditures should shrink from 20 percent of sales last year to 18 percent in 2008, Comcast said. Cable capital expenditures increased 29 percent to $6 billion in 2007.

In 2008, free cash flow is projected to rise at least 20 percent from its level of $2.3 billion in 2007, Comcast said.

In the fourth quarter, Comcast lost 94,000 basic video subscribers amid a slowing economy and a sagging housing market. In December, the company cut its full-year 2007 forecast because of declining home sales and competition from telephone and satellite TV companies.

The company added 523,000 digital video customers and 604,000 digital telephone subscribers. Moffett had projected gains of 333,000 digital video subscribers and 694,000 digital telephone subscribers. In last year's fourth quarter, Comcast signed up 614,000 digital video subscribers and 510,000 digital voice customers.

In October, Comcast said it had committed $8.2 billion for share repurchases, without giving a time frame. Today's buyback comes on top of $1.25 billion Comcast spent on its shares last quarter. Before that, Comcast had bought back $9.2 billion of its stock since 2003.

BLOOMBERG