Internet has a higher profit margin
Comcast (CMCSA) noted during its July 26 second-quarter earnings call that it’s increasing its marketing efforts to attract more Internet customers. Comcast has also been boosting Internet speeds for its customers.
The reason Comcast is emphasizing its Internet is that this business has a higher profit margin than its pay-TV business. The booming online video service space is driving up demand for high-speed Internet, and cord-cutting is emerging as another opportunity for Comcast.
260,000 Internet customers added
Looking at Comcast’s second-quarter results, it appears that its strategy of marketing Internet services seems to be paying off. The company added 260,000 high-speed Internet customers in the quarter, marking the highest Internet customer gain in the second quarter in a decade. Wall Street expected Comcast to add just about 200,000 high-speed Internet customers in the second quarter.
Q2 profit rose 27.6%
Comcast’s (CMCSA) revenues from its high-speed Internet business rose 9.3% to $4.3 billion in the second quarter. These gains more than offset weakness in its pay-TV unit, helping Comcast deliver 2.1% YoY (year-over-year) companywide revenue growth to $21.7 billion in the second quarter.
Comcast reported a $3.2 billion profit in the second quarter, yielding adjusted EPS of $0.65—above the consensus estimate of $0.60. Walt Disney (DIS) posted EPS of $1.87 in that period, missing the consensus estimate of $1.95. AT&T (T), Dish Networks (DISH), and 21st Century Fox (FOX) posted EPS of $0.91, $0.83, and $0.57, respectively, in the second quarter.