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Comcast Keeps Neutral Rec

Zacks Equity Research

Comcast Corp. (CMCSA) lately reported excellent financial results in the fourth quarter of 2011, easily beating the Zacks Consensus Estimates. While the company’s Cable Communication segment continue to beat market expectations, NBC Universal has started providing synergies. Comcast’s video subscriber churn became extremely low in the previous quarter, which was the most important news.

Comcast has completed its major technical innovations, such as DOCSIS 3.0, all digital networks, and a multi-platform content delivery network. The company recently launched a subscription-based video streaming service to significantly enhance its pay-TV offerings.

Comcast has raised its dividend rate by 44.4% and raised its share buy-back program by $6.5 billion. On the other side, the stock price has soared over 52% in the last year, which may restrict any above market gain. We thus reaffirm our long-term Neutral recommendation on Comcast. 

In 2012, Comcast is all set to offer several innovative products, such as nationwide roll out of Xcalibur (rebranded as X1) services, various home security services like the remote control of heating and cooling pattern of the home, expansion of Wi-Fi network, and introduction of a plethora of new contents for multi-platform on-demand services.

Recently, Comcast launched its major innovative product called Xfinity Streampix, a subscription based on-demand video streaming services. This is a significant augmentation of the company’s pay-Tv offerings, which currently provides traditional TV shows and Xfinity on-demand shows for TV sets and broadband enabled devices. With Xfinity Streampix, a customer can instantly view movies and TV shows whether he/she is in or out of the home on multiple platforms, e.g., TV sets, Computers, and mobile devices.

Nevertheless, Comcast needs to thoroughly revamp the NBC Universal businesses. We believe the immediate task of Comcast will be to lift the viewer-ship rating of NBC Universal, which is currently behind CBS Corp. (CBS), News Corp.’s (NWSA) Fox Network, Walt Disney Co.’s (DIS) ABC.

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