Hi Gary,
You are very lucky to be living in an area that has cable modem service. It is understandable that you would be interested in the potential of your cable company's stock.
You should be aware that all the cable companies have considerable debt and therefore comparibly crummy balance sheets. Thus there is a certain degree of financial risk involved. It has not been cheap to first lay all that cable and then upgrade it.
Once the infrastructure is in the ground, however, one might only speculate as to the broadband potential of this fiber-optic network. After it has been further upgraded for 2-way capability via hybrid fiber-coax (HFC) you have the potential for cable modems and video dialtone or cable telephony. Such upgrades can cost about $500 per home passed. Once sufficient penetration rates are achieved, these systems can be very profitable. In the meantime interest expense and depreciation eats up most of the cashflow so there will be red ink for quite a while.
Adelphia (ADLAC) appears to have concentrated on fairly small affluent communities such as Martha's Vinyard, MA; Boca Raton, FL; Mt. Lebanon, PA; Hilton Head Island, SC. This is important because affluent areas tend to demand lucrative premium services. On the other hand, ADLAC seems underrepresented in the plum high density urban markets that are desireable because of their population density. As the 7th largest cable operator in the country, with systems that are fairly spread out rather than contiguous, their economies of scale or scope are questionable. However they are actively swapping franchises with other cable operators to try to improve on this.
ADLAC has been in its own private bear market for the past ten years since peaking at 27 in '89 then falling promptly to 6 then back to 27 in '93 and now near historic lows at 7 again.
What's in store from here? Bill Gates $1 billion investment in Comcast, following closely on the heels of his $425 million purchase of WebTV would seem to bode well for the industry. Microsoft's cash, knowhow, and raw ambition can be a shot in the arm for this somewhat tired industry that may finally be on the cusp of some fundamental changes.
I follow most all the cable companies: ADLAC, CMCSA, COX, TCOMA, CVC, UMG, TWX. I feel positive about the direction of change for the industry. Although the Rigas family is obviously committed to this industry, I expect ADLAC to be gobbled up in a wave of consolidation in a few years time as MSFT spreads its tenticles around this industry. I don't know if your investment in ADLAC will eventually be traded for MSFT stock, but you could probably do far worse than to invest in ADLAC at these levels.
Good luck,
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