Comcast Corporation (NASDAQ:CMCSA) Fighting A War against the Internet Core Companies

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By Chris Hillman on July 25, 2014 Technology & Software

Comcast Corporation (NASDAQ:CMCSA) is winning all the battles right now, against its fight with other major internet companies online. The question is whether the company will be able to win the war or not. The war is between the internet companies like the Time Warner Cable (TWC) and Comcast Corporation (NASDAQ:CMCSA), together with the phone companies such as Verizon (VZ), AT&T (T) and Century LINK (CTL), and the internet companies like Netflix Inc (NASDAQ:NFLX) and Google (NASDAQ:GOOG).

The core companies have lower costs since they send out bits of data, and they are more quick and lively than the edge companies that provide the network infrastructure for the actual connection. With the customers buying content from the core companies these days, the popularity of edge companies has gone down. In this internet era, edge companies are finding it hard to get paid for their services.

By posting high numbers for its quarterly reports, Comcast Corporation (NASDAQ:CMCSA) has no doubt won another of the battles. During the quarter, the revenues of the company increased by 3.5 percent whereas the cash flow jumped up by 7 percent. Moreover, the EPS (earnings per share) rose by 16.9 percent, surpassing the predictions of 76 cents/share, and the operating income jumped up by 10.7 percent over the last quarter.

Stocks of Comcast Corporation (NASDAQ:CMCSA) are flying high right now and its price to earnings ratio is at 19.4: near Google’s P/E. However, the company lost around 144,000 video customers during the last quarter. The client figures are now at 22.46 million. Although the company saw an increase of 203,000 in its internet users but the revenues derived from internet operations are far less than the revenues from the video operations.

Right now, a war has been going on over the billing of bits that the internet core companies send. The bits were previously sent following the doctrine of peering: the bit system was 2 ways as found in the phone call transmission (the person making the call is charged). However, the Federal Communication Commission is trying to alter this system. A lot of criticism has been raised against FCC’s step as people are afraid that any alteration in the system will put a stop on the open internet era. The regulators are in fact trying to find a way to make the internet core companies pay for their bits. If the commission successfully alters the systems, the edge companies will also have to pay more as their infrastructure, maintenance and up gradation costs are way more than the internet core companies.

The shares of Comcast Corporation (NASDAQ:CMCSA), on the last trade day, July 24, 2014, opened at a price of $54.96 and closed at an increased price of $55.13. The intraday range for the company was recorded to be from $54.71 to $55.25. Comcast Corporation (NASDAQ:CMCSA) has a total market capitalization of $143.33 billion with a price to earnings ratio of 19.41. As far as the dividend yield of the company is concerned, the figures are reported to be around 1.63 percent.