Comcast: Party Like it’s 1999

Big surprise from Comcast (CMCSA) today in the capex department. Barrons has a nice summary of the results. Revenue, subscribers, operating cash flow all met the expectations of the frothing massess, except Capex projections for next year were $1B higher than anticipated. Yes, 20% higher. Updated w/Chart

People might not react as negatively except for the fact that CEO Brian Roberts constantly trumpets the installed plant advantage of cable over the Telcos.

If this is the case, why the sudden spike in Capex at Comcast? From the Financial Times:

Mr Roberts said he wanted to build on this “first-to-market advantage”. “We can capture market share now,” he said. “We’re going to invest capital to drive that growth.”

Somebody stop me before I start to party like it’s 1999.

I was negative on cable and positive on Telco in 2006 and I turned out to be 1/2 right. In 2007 I’m negative on both for the following reasons.

1. Investor sentiment for both Telecom and Cable is high. These sectors were at the top of the performance heap for 2006 and are no longer un-loved.
2. Telcos (VZ) (T ) are trading near the top of their historical trading range relative to dividend yield. Remind me: why else do you buy utilities