Comcast Growing Revenue Despite Cable Sub Declines

Comcast is a profitable, growing organization.  With one foot in distribution and the other planted in content, Comcast saw their second quarter of revenue grow over 6% while operating income grew over 4% from the same quarter last year.  In a recessionary economy, Comcast seems to be doing well. The stock market must like the numbers because the stock price is up today as well.

As for the cable part of the business, Comcast must recognize that its subscriber numbers continue to drop.  While the loss is lower than anticipated, it still adds up to almost 400,000 less subscribers for the year.  But Comcast is able to offset those losses with an increase in both broadband and telephone customers.  And that trend is likely to continue for quite some time.  The younger generation is more oriented toward a broadband connection than to cable and the cost of a cable subscription only pushes the envelope for more cord cutting.

On the programming front, NBC and their owned cable networks are performing within an expected range, the Olympics could actually break even, and Universal Studios has had some hits to offset their box office duds.  Thumbs up to "Ted", thumbs down to "Battleship".  So congrats to Comcast, content and distribution together seems to be a successful mix.

Will Apple Split Its Stock And Go Into The Dow?

Apple is sure in the news lately and not just because of its anticipated fall release of the iPhone 5 and Mini iPad.  And not because of their courtroom drama with Samsung over patent rights.  Now it is will Apple decide it is time to split its stock price and become a part of the Dow Jones Industrial Average.  According to Bernstein Research analyst Toni Sacconaghi, it is being discussed.  "The idea of splitting the stock does not seem to be a religious issue for Apple: the company has actually split the stock three times before, each time a 2-for-1 split – the previous splits were in June 1987, June 2000 and February 2005. One question is whether a two-for-one split would be enough to get the stock into the index without overwhelming other components; you could argue that the stock ought to split four-for-one, or even six-for-one, which would still make it one of the highest priced companies in the index."

Of all the tech companies out there, Apple has been the most fun to watch, both for investors and for consumers.  For now, Apple continues to be questioned on how long it can grow its momentum.  Once everyone has an iPhone and an iPad in their home, what is the next big product that every home and every consumer must have?  It could be the Apple TV or perhaps there is something else being secretly designed.

You Tube Channel Focus Building A Bigger Content Distribution Platform

Google's investment in You Tube continues to grow as it turns You Tube into an aggregated distribution platform of hundreds of channels.  More content, more choice, more eyeballs to online, and more ad revenue.  And perhaps secondarily, an alternative to linear cable distribution.  "The site has launched nearly 100 new channels so far this year, attracting talent such as actor Amy Poehler to create or star in original episodes in an effort to draw new audiences—and blue-chip advertisers."

It reminds me of the early days of cable, as networks tried to appeal to viewers to augment their favorite channels and give CNN or USA a try.  Over time, broadcast viewership has eroded while cable has gained.  Today, it is You Tube and other online platforms that are taking its slice of the share away from cable and broadcast.  Over time, their percentage will also become significant.

As cable programmers and now online programmers continue to learn, what you put on the platform needs to be interesting and it needs to be found.  "The channels themselves, meanwhile, are working to find their place, with a lot of trial and error along the way.  'Just because you build it doesn't mean they'll come,' says former television executive Larry Aidem, talking about YouTube viewers."  But being small allows you to make quick changes to adapt quickly to new information.  Learning what the viewer likes is a strange fickle business, just ask NBC and the other networks as they premiere new shows year over year hoping to find the next hit.  For online, there is less risk at stake so there is more opportunity to experiment.

You Tube and online has the  advantage of less barriers to entry.  It's easy to upload content.  The  bigger challenge is promoting it and helping viewers to find it.  With so much clutter, it is only getting harder and harder to get noticed.  The key is being featured and recommended so that you break through and become viral.  So far, my favorite channel on You Tube is the Above Average Network and my favorite series, The Front Desk.

Does Apple Need To Own A Social Network?

Some public speculation that Apple is considering a major investment in social networking site, Twitter, as a means to extend itself in this space.  Perhaps also to compete as much with Google who chose to build their own social site, Google Plus.  But is this the best investment choice for Apple?  "Apple and Twitter are logical partners in some ways. Unlike Facebook or Google, Twitter has no plans to compete with Apple in the phone business or elsewhere. And as Apple has found, social is just not in its DNA."  Still I wonder if there is  a profitable long term future in social networking?

Ask Facebook that question and the stock price today says no.  Trading below its IPO, Facebook is yet a runaway financial success.  Twitter is only as successful as the ads that  run on it; but those ads, like the ones on Facebook's timeline have started to become intrusive and unwanted.  And should Twitter fall out of favor, there are other sites eager to take a lead.   A financial investment in Twitter may be a defensive move, but Apple's success has been in being an innovative company.

Where I would like to see more investment is in products that improve and differentiate the security of their products.  And in products that enable more e-commerce and wallet applications.  For me, that could mean investments in PayPal and Square.  These companies and others are changing our purchase behaviors and improving the ease in which we transact business.  Apple's push to better security over our devices will also be an important differentiator.  And lastly, the battery that runs our devices and the quantum leap that is still needed to allow these products to run for much longer periods without a recharge, is to me a very valuable investment.

Twitter and Facebook and other social network apps should be enabled to easily integrate with other programs - photos, music, videos, etc.  That can happen regardless of a deep financial investment.  That Apple products remain a deeply integrated part of our lives, in our communication among family members as well as with our social circles, and the must have device from when we wake up to when we fall asleep remains the top priority.

Could Google Overbuild The Cable Operators

Kansas City is a buzz over Google Fiber and cable operators may be concerned that a new rival is in town.  "Google Fiber makes the cable-based ISPs look pathetic. It promises to offer speeds up to 1,000Mbps downstream and upstream, for only $70 a month." Bring audiences in at a faster and cheap rate and win them over.  "For Google, the main business purpose of Fiber is to give people faster Internet access, so they'll spend more time online -- where they're more likely to use a Google product and click a Google-sold ad. But just like Gmail unlocked an enterprise business, Fiber could unlock a whole new business as an ISP and TV provider."

And according to a Multichannel article, Google is also in talks with some large programmers, including Disney, Turner, and Fox.  How Google Fiber  tests in Kansas City could demonstrate the value to Google of rolling out this service across other cities.  Still the infrastructure to support such a rollout and manage the pipeline must be enormous, but if anyone has the deep pockets, it is Google.

Xfinity Means What To You

Branding is a tough game.  A new brand can cause quite a bit of confusion until consumers can understand its identity and value.  For Verizon, it was trying to explain how it was better than staying with Bell Atlantic or NYNEX as a brand.  For Radio Shack, it is wondering whether the name should be changed to reflect a changing technological environment.  And for Comcast, it means explaining why Xfinity best represents its bundle of products.

So far, consumers may still be unsure what Xfinity is, what it stands for, and why Comcast has introduced a new name.  "Comcast Corp. is launching a marketing campaign costing at least $170 million, to fix what Chief Executive Brian Roberts has acknowledged has been a less-than-successful two-old corporate rebranding effort."  Xfinity is meant to be far more than just cable, phone, and data.  It is how consumers live their lives in and out of the home.  "The new advertisements aim to show what an integrated Xfinity 'experience' feels like to a customer."  That the products actually work seamlessly together.

It may be the expectation, but I am unsure if it is yet the reality.  Do consumers know how to use the Xfinity apps to integrate devices? Do they see the synergy yet?  And most important how can Comcast get current customers to take full advantage of what they offer in order to unlock the value and improve customer satisfaction.  It is clearly a work in progress.

BSkyB Banking On Over The Top

The truth is that if you can't beat em, join em.  The rise of broadband and the fear of consumers switching to IPTV devices has cause BSkyB to consider new distribution strategies.  "BSkyB will spend £30 million cutting its own cord through Now TV".  The truth is clear; why let other platforms take away this audience, better to have a presence in the OTT space too.  "That gives us a clue how much BSkyB is investing to protect its heavyweight satellite and triple-play offering from disruption by new over-the-top (OTT), cord-cutting services and platforms, and to seek new online customers".  As a new platform it also allows more flexibility to create a low cost package of service and support a consumer preference to a la carte offerings.  From my vantage point, it is a very smart move.

What Is A Radio Shack?

Sad to say but it looks like another institution is on a path toward closure.  It seems that Radio Shack has not changed with the times.  We no longer build radios in our basement, we no longer seek wires and connections; technology has changed the process and Radio Shack has become less relevant.  Today it tries to compete with wireless phone stores, big box electronic companies, and even some toy stores; but what is Radio Shack?

"While RadioShack is suffering from industry-wide trends — including declining TV sales and consumers using their smartphones to compare prices, as well as an uncertain economy where shoppers shun spending on high-ticket items — analysts said the company has made several mistakes."  To me, the biggest one is its name.  It no longer connotes innovation but reminds us of older technology.  Second, it neither offers any real differentiated product or better price point to challenge its various competitors.  And third, its merchandise consists of  an "'overloaded product assortment,' including 'obscure items' such as magnifying glasses and soldering irons that make its stores hard to shop."  So frankly, the question to ask is, can Radio Shack be saved.

For one, a name change couldn't hurt, one that resonates a more future technologist approach.  A better mix of merchandise especially in the mobile and web space.   Build out an exclusive product line at a competitive price point.  And less reliance on big screen products that need larger merchandise layouts than Radio Shack can offer.  Perhaps its time for "The Web Shack" or Tech Shack" or "Digital Shack' to emerge.

Do We Expect Too Much From Apple?

Apple released their quarterly earnings last night and the analysts were disappointed in the actual verse estimate. Despite rising year over year, it just wasn't good enough.  The challenge may be in what lens we look at companies like Apple.  Is it fair to look at it so closely over a quarter, especially when product life cycles and new release dates can significantly affect short term buying behavior.  I mean why buy a new iPhone today when the rumors of a new model before end of year causes us to wit on the sidelines to wait.  And once the new iPhone, new iPad, and other releases occur, won't they tend to send unit sales through the roof.  I mean the first week of a movie release is always higher than the 5th week.

Financially, Apple is still a rising star. And while the short term bump on the stock price is part of the game, Apple continues to impress in the long run.  Knowing that there is product to be released, seeing how well the iTunes business grows as a result of these sales, and the impact Apple has on other companies and businesses, I still believe that Apple is a long term play.