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Comcast posts 3Q gains
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October 31, 2001: 1:15 p.m. ET
No. 3 cable company's cash flow rises 13% as revenue jumps 20%.
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NEW YORK (CNNmoney) - Comcast Corp. shares edged up at midday Wednesday after the company said third-quarter revenue and operating cash flow rose sharply from the year-ago period.
The No. 3 cable operator, which is bidding for AT&T Corp.'s cable assets, reported operating cash flow rose to $705.8 million from $605.7 million a year earlier, while revenue increased 20 percent to $2.36 billion from $1.96 billion.
"The cable division came in with 13 percent cash-flow growth, which is basically the strongest we're going to see out of the whole cable industry this quarter," said Frederick Moran, analyst with Jefferies and Co. "They're showing some real power."
Moran, who has a "buy" rating on the stock, said Comcast seems impervious to the weakness the cable sector has seen since the second quarter.
Comcast (CMCSK: up $0.29 to $35.72, Research, Estimates) has swapped a number of systems with other operators and made several acquisitions in the last year. Assuming the same portfolio of assets, third-quarter operating cash flow rose 13.6 percent on a revenue increase of 10 percent.
Operating cash flow, a widely watched indicator for cable companies, excludes depreciation, amortization costs and other one-time expenses.
The company reported a net loss of $106.8 million, or 11 cents a share, compared with a year-ago profit of $1.25 billion, or $1.29 a share. Boosting the third-quarter 2000 results was a one-time gain from an option from AT&T for Comcast to exchange its investment in the now-bankrupt ExciteAtHome for a waiver of board and shareholder rights.
"Because Comcast invests so heavily in acquisitions and development in infrastructure, their depreciation and amortization expense is huge and it really pressures the profit," Moran said. "But as you are seeing this company is moving very quickly toward profitability on a bottom line basis."
At the end of September, Comcast finally signed a confidentiality agreement that revived talks for AT&T's broadband unit, which would triple Comcast's number of subscribers.
But Moran said if a deal is not struck by the end of the year, it probably will not happen at all.
AOL Time Warner also has made a proposal to buy the broadband unit.
Earlier this month, Comcast, which also owns the QVC home shopping channel and stakes in the Philadelphia Flyers and Philadelphia 76ers sports teams, raised its 2001 forecast for digital cable subscriptions to 2.3 million from 2.2 million; they increased by 243,400, or 21 percent, in the third quarter from the second.
The company finished the quarter with 2.12 million digital cable subscribers.
Comcast also added 117,100 subscribers to its high-speed Internet service, bringing the total to 792,700. 
-- from staff and wire reports
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