Cox first quarter: ‘Firing on all eight cylinders’

Despite an accounting change that caused net income to fall 80% from a year ago, Cox Communications said its first-quarter results showed it’s “firing on all eight cylinders.”

The nation’s fifth-largest cable operator posted net income of $235.5 million, compared with $686.6 million a year earlier. Pro forma operating cash flow increased 12% to $401.8 million for the first quarter, and pro forma operating cash flow marketing was 34.1 %, the company said. Total first-quarter revenues were $1.178 million, a 19% increase over first quarter last year, and operating cash flow--affected by a one-time charge related to discontinuing Excite@Home service--came in at $392.1 million, a 9% increase over last year.

Overall, company officials were anxious to say, Cox’s performance is not being adversely affected by a slumping telecommunications space, although its stock continues to take hits.

“I want you to hear loud and clear today that we are delivering excellent operating and financial results and a strong balance sheet,” said Jimmy Hayes, senior vice president of finance and administration and CFO. “The fact is, Cox is firing on all eight cylinders.”

High on the list of positives, Hayes said, was the addition of 18,000 new customers subscribing to high-speed Internet and/or telephone but not video, and 63,000 new customers overall who joined in the first quarter, as opposed to 48,000 in 2001 and 55,000 in the last quarter.

“Bundling [of voice, video and/or high-speed data services] continues to fuel our success,” said Patrick Esser, Cox’s executive vice president of operations. ”We’ve added more bundled customers in this quarter than ever before.”

Companywide bundled penetration grew to 19% in the quarter—vs. 12% a year ago--and three-service bundled customers are generating $140 monthly income. Two-service customers bring in $88 per month each on average.

With this kind of success, Cox is a potential target to be acquired--or to acquire a smaller company. That’s never far from the company’s purpose, said President and CEO Jim Robbins. However, “we are comfortable with our current size, with our current markets, and arguably are operating more successfully than anybody in our field today. We may want to grow larger over time, but we do not feel compelled to make any acquisition simply for the sake of making an acquisition or just to get bigger.”