Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (30969)	3/23/2000 9:47:00 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Comcast Comes Calling Hank Shaw, CFA Mar 23 2000 The recent pullback in Comcast [CMCSK] stock to $40 per share represents an excellent entry point for investors. The cable operator?s stock is down more than 30 percent from its 52-week high of $57, yet our recent meeting with management suggests the growth aspects of the story remain firmly in place. It's all about digital. Several key issues support our positive view on the fundamental story for Comcast. Growth through acquisitions: Comcast has basically doubled the size of its MSO footprint over the past 14 months, while increasing the density of its main geographical clustering (grouping of customers within geographical regions). Since December 1998 the company has announced assets purchases that increase the subscriber base from 4.6m to 8.2m. Year Purchase Subscribers 1999 Jones Intercable 1,000,000 Greater Media 100,000 2000 Lenfest 1,250,000 Prime Cable 500,000 AT&T 750,000 Digital cable: Comcast has grown its digital cable subscriber base by a compound quarterly rate of 29 percent. The company continues to experience greater-than-expected demand for the rollout of digital cable, posting a total of 520,000 subs vs. management?s original plan of 320,000 by the end of 1999. The service costs $10/month, with $9 falling directly to the bottom line--90 percent incremental margins--making the offering extremely profitable on top of its high growth rate. Comcast expects to double the number of subscribers over the next 12 months alone, with 90 percent of the homes passed being eligible for the service offering by YE00. Additional revenue stream opportunities include video on demand, interactive TV, and eCommerce, as well as a higher percentage of additional premium channels per household, all of which should enhance the company?s overall profitability. Internet access via @Home [ATHM]: Comcast tripled its subscribers to the Internet product during FY99 to 150,000 subs. @Home is sold at $40 a month (which includes modem lease and 1.5Mbps downstream connectivity), with high incremental margins as well. Management reiterated the supply constraint nature of the product offering, and assured us they are aggressively working towards increasing the FY00 weekly rollout rates by as much as 65 percent. If they are successful, the company should be able to double the number of subscribers this year. Upgrade of plant: The company continues its aggressive plant upgrade program to insure that the infrastructure will be in place to support the new product offerings that will generate the expected significant incremental EBITDA (a measure of cash flow) in coming years. Comcast continues to be an industry leader in this respect with expectations for 85 percent plant upgrade by YE00 (including recent acquisitions) and the company expects to reach 95 percent completion by YE01. In all, the next two years will represent approximately 2.3bn in infrastructure investments by the company. These funds are expected to be generated via internally generated EBITDA combined with the continued monetization of non-core assets on the balance sheet, of which Comcast has approximately $8bn (recent $1.8bn ACES transaction involving the company?s investment in PCS is the perfect example). Having ample capital at its disposal, the company is not expected to alter its current leverage, but with 45 percent Debt to Total Capitalization and its BBB (investment grade) debt rating, Comcast could borrow additional funds at attractive rates in the credit market if needed. At 16x FY00 estimated EBITDA per share, the stock is at an attractive valuation for a company that has generated a compound annual growth rate (CAGR) of 18 percent for revenues and 22 percent for EBITDA over the past five years. Comcast continues to generate attractive growth via new product offerings. Continued capital investment issues are squelched by the company?s strong internal EBITDA growth combined with its substantial war chest of non-core assets.

To: IQBAL LATIF who wrote (30969)	3/23/2000 11:27:00 PM
From: tracor	Read Replies (1) \| Respond to of 50167

Ike, Again my compliments to you on an outstanding call on these markets. Congrats and thankyou. My OTMs have done very well and I see SOS perked up today.....you are something else. Best Regards, RZ