Cox Communications Inc. reported its highest-ever quarterly growth in
high-speed-data subscribers in the third quarter, but the MSO told analysts it
would revise downward its guidance for basic-subscriber additions for the year.
In its third-quarter conference call with analysts, Cox said it added 157,300
high-speed-data customers in the period, besting its previous record by more
than 40,000.
Telephony-subscriber additions also beat expectations, with 73,000 additional telephone customers.
Analysts had estimated that Cox would add about 58,000.
Digital-cable growth slowed in the period, as expected, with 71,900 customers
taking digital packages, down from 102,000 in the second quarter.
Cox had said earlier this year that it would allocate fewer marketing dollars
to digital in favor of higher-margin services like high-speed data and
telephony.
Cox also said it would increase pricing on its high-speed-data product in
select markets by about $5 per month beginning in the fourth quarter.
Although the company would not specify which markets would see the increases
first, executive vice president of operations Pat Esser said the increase would
be implemented in about one-half of Cox's high-speed-data markets by the middle
of 2003.
Although basic
subscribers increased by 13,000 in the period -- or by 1.2 percent since the beginning
of the year, to 6.3 million -- Esser said on the conference call that overall
basic growth in 2002 would be in the 1.1 percent to 1.2 percent
range.
Earlier guidance tagged basic growth at 1.3 percent to 1.5 percent.
However, Cox reiterated its year-end guidance of 14 percent to 15 percent
revenue growth and 13 percent to 14 percent operating-cash-flow growth.
For the quarter, revenue increased 16 percent to $1.275 billion and operating
cash flow rose 14 percent to $453.4 million, in line with analysts'
expectations.
Investors appeared spooked by the lowered subscriber
guidance, driving Cox shares down more than 7.6 percent, or $2.30 each, to $27.85
per share Tuesday.
