SubscribeJ.P. Morgan Securities likes what it sees from Comcast and Time Warner Cable, the nation’s largest cable companies. It has begun coverage of both companies, calling them ripe for growth potential.
Analyst Mike McCormack was particularly impressed with the cable companies’ success in selling bundled products to customers — packages containing video, telephone, and broadband service. McCormack also noted that cable companies’ capital expenditures to provide services to customers continue to decline, allowing earnings and free cash flow to increase.
In a note to investors, the Wall Street firm said both companies had great potential to increase revenue from customers signing up for voice and data services, which the firm feels has low penetration rates. Comcast was praised for its position to expand the “average revenue per user (or subscriber)” as higher speed data products gain popularity.
McCormack was much less positive about cable’s biggest rivals — telephone companies. McCormack said cable was in a stronger position because telephone companies are continuing to lose an increasing number of traditional wired phone line customers, and earnings from the “maturing and increasingly competitive” wireless industry are likely to be lower.
The wireless mobile phone industry, especially prepaid mobile service, continues to undergo a price war which is positive for consumers, but seen as increasingly negative by Wall Street.
Other stories of interest:
- Cable “Digital Phone” Service Hits Speed Bump: No More Easy Money, Says Wall Street Analyst
- If Profit Margins Decline for Wired Broadband, Wall Street Will Deliver A Spanking
- When Competition Isn’t: Comcast<->Clearwire<->Time Warner Cable
- First Take: Time Warner Cable Adds Broadband Customers, Sees Higher Revenue, Costs Plummet in 2nd Quarter
- Time Warner Cable Reports Healthy Growth in Broadband in 1st Quarter 2009
