Comcast grows 1Q revenue 5%

Cable giant Comcast Corp. navigated the deep recession with a 5 percent gain in revenue in the first quarter and 627,000 new phone or Internet customers.

But Comcast executives warned of a 25 percent drop in cable advertising, which shows no sign of letting up, and a weakness in new-customer growth in March and April.

Adding new cable-TV customers has been hampered by foreclosures and the prolonged slowdown in the new-housing market, the company said.

Comcast lost 78,022 cable-TV customers in the first quarter, which ended March 31, compared with a loss of 56,847 in the year-ago period.

Comcast also disclosed a $1 billion plan to upgrade its giant cable system to all-digital transmissions from the traditional analog and digital.

The $1 billion project will force about 3.4 million basic analog customers with Comcast to decide whether to upgrade to digital and will result in Comcast distributing tens of millions of new set-top box devices to customers.

Comcast says the conversion to an all-digital cable system will boost its channel-carrying capacity and lead to faster Internet speeds and more high-definition programming. The upgrade also could make Comcast more competitive with satellite distributors and Verizon Communications Inc.'s FiOS product, experts say.

"Our digital conversions are a major initiative for the company," Comcast president Steve Burke said in a morning conference call. "Virtually every person in every system in our company will be involved."

In its earnings announcement, Comcast said first-quarter revenues were $8.8 billion, compared with $8.4 billion in the year-ago quarter.

Cable-TV revenue rose 3 percent, to $4.9 billion; high-speed Internet revenue jumped 9 percent to $1.9 billion; and telephone revenues soared 32 percent, to $777 million. Comcast calls itself the nation's third-largest telephone company, in addition to the largest cable-TV company.

Net income was $772 million, or 27 cents a share, compared with $732 million, or 24 cents a share, a year ago. The 2008 result included a special gain of $144 million.

The company trimmed its account receivables, which some feared could swell because of unemployed cable customers, and added to cash on hand.

Comcast shares were trading at $16.08, up 84 cents, in late-morning Nasdaq trading.