Comcast Stock Plunges on Guidance Revision

Time Warner Cable, Cablevision Systems Shares Down, Too

Comcast shares plunged Wednesday morning after the company revised its outlook for its financial performance in 2007.

The nation’s largest cable operator said that as a result of a “challenging economic and competitive environment,” revenue-generating-unit growth for 2007 is forecasted to be 6 million units versus a previously forecasted 6.5 million, bringing the total number of RGUs to 57 million.

As a result, cable-revenue growth for 2007 will be 11%, down from the previous guidance of at least 12%, while cable operating-cash-flow growth will be approximately 13% versus at least 14% previously. The company’s consolidated-operating-cash-flow growth is now expected to be about 13% for the year compared with previous guidance that suggested growth of at least 13%.

Additionally, Comcast expects capital expenditures to be $6 billion in 2007, 5% higher than the company previous forecast. In a statement, the company attributed the rise to “increased advanced digital set-top-box purchases, the company’s digital-acceleration program, expanded network enhancements and acquisition-related investments.”

Consolidated free cash flow is projected to be 80% of the 2006 level, lower than the previous guidance of 90%.

Commenting on the revisions, Comcast co-chief financial officer Michael Angelakis said the company was very bullish on its momentum coming into the year. However, since the beginning of the third quarter, “We’ve seen a real softness in the business related to a combination of macroeconomic issues in markets and competitive intensity.”

Shares of Comcast plunged through its 52-week low on the news and were down more than 10% in late-morning trading. The stock had been improving in recent sessions on the Federal Communications Commission’s failed bid to prove that cable breached the 70/70 threshold and the company’s announcement that it was not participating in January’s auction of wireless spectrum. The stock hit a high of $21.62 per share Monday but hit a low of $18.35 Wednesday morning.

Other cable stocks were also suffering Wednesday morning. Time Warner Cable was down over 6% through midday after hitting a session low of $25.31 per share, while Cablevision Systems was down more than 5.5% and hit a 52-week low of $25 earlier in the day.