Comcast beats Street on phone, Internet service

By Franklin Paul

NEW YORK (Reuters) - Comcast Corp's quarterly profit rose a better-than-expected 22 percent, as it sold more phone and Internet subscriptions, helping to fight competition from phone and satellite companies.

But the largest U.S. cable company, which sources have said is in talks to take control of NBC Universal, suffered from a lack of corresponding gains in revenue received from each customer, due to promotional discounting to woo or retain subscribers.

"While third quarter unit growth showed some cause for cautious fundamental optimism, we are wary of increased competition and maturation," said Standard & Poor's Equity Research analyst Tuna Amobi, who rates Comcast shares at "strong sell."

The Philadelphia-based company reported 361,000 new high-speed Internet customers and 375,000 new digital phone subscribers in the third quarter, offsetting the net loss of 132,000 basic video subscribers.

Barclays Capital had expected 310,000 voice and 320,000 Internet additions.

But Collins Stewart analyst Thomas Eagan said, "They didn't generate the revenue and cash flow that we had expected."

On a conference call with analysts, Brian Roberts, Comcast's chief executive, addressed reports about NBC Universal talks. But he shed little light on the existence of a potential deal.

"While we can't comment on rumors, I would like to reinforce that we only look at opportunities in our core businesses that potentially can accelerate growth, make those businesses more profitable and differentiated and give them the benefits of scale," he said on a conference call.