CEO: Mediacom "very comfortable" with higher 2008 guidance
Despite the turbulent general economy, Mediacom Communications Corp. (Nasdaq:MCCC) CEO Rocco Commisso is confident about the cable-television company’s raised 2008 guidance. Commisso made the comments during a morning conference call.
Based on robust first-quarter results, Mediacom increased its 2008 revenue guidance to a range of $1.37 billion to $1.39 billion, from a previous range of $1.36 billion to $1.38 billion. Wall Street analysts project revenue of $1.38 billion.
“We had a solid start to 2008 and although we are headed into a seasonally slow period, we are raising our full-year guidance and plan to spend more to satisfy strong customer demands for HDTV and DVR set-top boxes,” Commisso said.
In response to an analyst’s inquiry, Commisso said the company is being careful not to put out numbers that it can’t meet. Mediacom is “very comfortable” with its guidance.
CFO Mark Stephan said the firm expects capital expenditure expenses during 2008 to total $275 million, compared with initial midpoint guidance of $260 million.
“Even at $207 per customer, we compare favorably with the industry average of more than $230,” Stephan said. “We believe we are being careful with our [capital expenditure] spending, so we are making sure we balance growth capital with network investment to keep us competitive in our markets. Moreover, this incremental [capital expenditure] spending is aimed at success-based, revenue-generating investments.”
The chief financial officer said 2008 will be a “high point” for capital expenditure spending and expects spending to trend lower in 2009 and beyond.
“Even with the higher capital expenditure spending, free cash flow is expected to swing from a negative $4 million to a positive $7 million in 2008,” Stephan said.
To compete with lower-priced DSL Internet service, Commisso said Mediacom will deploy a new high-speed Internet service to 98% of its footprint by June 30.
“We take great pride in this new product launch because, with the exception of a few markets where Verizon has launched [high-speed Internet service] FiOS, we are the first and only Internet service provider that will offer a super high-speed broadband product to essentially all of our customers,” Commisso said.
The company believes it can steal some of DSL’s market share, John Pascarelli, Mediacom’s executive vice president for operations, said.
The firm increased its marketing spending to provide more direct tactics, such as heavier use of door-to-door sales, direct mail, e-mail, broadcast TV and telemarketing.
“The [marketing] should provide a more consistent flow of sales,” Pascarelli said.
Mediacom reported early Wednesday that its first-quarter loss widened to $30.6 million, or $0.31 per share, down 81% from $16.9 million, or $0.15 per share, a year earlier. Wall Street analysts, on average, expected a loss of $0.07 per share.
Revenue for the three months ended March 31 rose 10% to $339.7 million from $307.9 million in the same quarter last year. Wall Street anticipated $332.8 million.
Advertising revenue slipped 3% to $14.7 million from $15.2 million a year earlier, but phone revenue rose 70% to $19.5 million from $11.5 million during the year-ago period. High-speed data revenue also jumped 15% to $76.9 million, compared with $65.5 million a year ago. Video revenue increased 6% to $228.5 million from $215.6 million during the same quarter of 2007.
Total operating costs during the quarter increased 7% to $213.9 million, versus $200.4 million a year ago.
In midday trading, MCCC shares are up 17.32%, or $0.79, at $5.35.
