said by Derek Turner :For example, the Wall Street Journal: »
blog.ockhamresearch.com/ ··· to-come/Comcast, for instance, has a profit margin of 55% in video but 70% in phone and 80% for broadband, estimates Bernsteins Mr. Moffett.
Again, these numbers are
marginal operational costs and I still dispute they are accurate for even that calculation.
Those numbers ignore the debt that is still on the books and the interest charges to pay off that debt. And it ignores all the support and overhead costs of running a business.
The real profit margin for the last full year result(2008) is 7.4%. Of course I count all the costs and not just unencumbered marginal operating costs.
»
www.cmcsk.com/common/dow ··· =1166691said by Derek Turner :And this is verified by the FCC's own broadband task force. See slide #44 here:
»
hraunfoss.fcc.gov/edocs_ ··· 42A1.pdfWhich explains an ISPs' total (capex + opex + transit) cost in an urban area are $91 per customer per year. Assuming cable ARPU for modem service of $40 per month, that is an 81% profit margin.
Does not include costs already incurred (e.g., spectrum, prior plant build-out).
Let's take these a point at a time:
[A] $91 number does not reflect actual costs:
$91 was for URBAN areas only. Last I looked cable companies didn't just serve URBAN areas. That slide shows the cost is tremendously higher for rural access.
Well the cable companies are still paying for those already incurred costs thru the interest and principal on all the bonds that underwrote that construction.
------------------------
So to summarize: Ignoring all the costs is a red herring that tries to make Comcast and other cable companies look like robber barons, when the profit they make is not even covering their real
cost of capital. Why do you think their stock price is so low? Because what they earn in income is barely enough to keep investors from taking their money and going elsewhere for better returns.