Comcast Corporation: Business and Financial Environment - Research Paper Example

The company’s growth has considerably increased over the last few years. Secondly, DirecTV is a provider of American direct broadcast satellite service in California. DirecTV’s satellite service was launched in 1994; it engages in the transmission of digital satellite television and audio mainly in the United States and Latin America. DirecTV had 19.2 million subscribers at the end of 2010. The third organization of choice, Verizon Communications engages in broadband and telecommunications business globally; it is an element of the Dow Jones Industrial Average.

The financial position of Comcast

While conducting thorough scrutiny of the financial statements of Comcast during the past several years, it is clear that the company is rapidly moving towards economic expansion. In 1995, the book value of a company’s share was $8.19 and it reached $15 per share in 2009. It shows that the company could double its price per share during this period of 14 years. An increase in share price is a direct indication of increased market demand for Comcast’s services. By the year ending 31st December 2010, the firm’s total revenue stood at $37, 937 billion and it represents an increase of $2181 billion as compared to the previous year when the total revenue was $35,756 billion (Comcast). However, a proportionate increase in net income cannot be seen in the financial statement. The company’s net income stands at $3,635 billion by the end of the year 2010 whereas it was $3,638 billion in 2009. It has been identified that Comcast’s net profit margin rose from 4.2% in 1999 to 8.4% in 2009 (Comcast). During this same period, the firm’s operating margins and return on equity notably improved. Finally, Comcast’s total selling/general/administrative expenses climbed from $5,075 billion in 2006 to $8,091 billion in 2010 (Comcast).

Financial comparison

       As in the case of Comcast, DirecTV also shows a rampant increase in its total revenues during the last few years. DirecTV’s total revenue indicates the figure of $24,102 billion while it was $21,565 billion in 2009 (DirecTV). In contrast, Verizon’s total revenue faced a decline in 2010; it fell from $107,808 billion in 2009 to $106,565 billion in 2010. As a result, Verizon also faced a decline in net profit by $2345 billion (Verizon). Verizon’s financial statement reflects that its economic position is not satisfactory. The company’s net income gradually diminished and the Verizon even suffered a net loss of $2,193 billion in 2008. The poor financial performance of Verizon Communication in 2008 can be directly attributed to its increased total selling/general/administrative expenses ($41,517 billion) (Verizon).

On the other hand, it seems that DirecTV reflects a better financial performance during the past several years except in 2009. DirecTV’s net incomes were $1,420; $1,451; $1,521; $942; and $2,198 billion respectively in 2006, 2007, 2008, 2009, and 2010. Although DirecTV struggled with a $942 billion net income in 2009, it could effectively resurrect in 2010 by increasing the net income by $1,256 billion (DirecTV). Evidently, differences exist in the financial statement composition of these three entities. To be more specific, Comcast possesses a better financial position as compared to DirecTV and Verizon.          

     In this era of cut-throat competition, it is difficult to trim down operating expenses. However, the firms can avoid certain unnecessary spending. Hence, it is advisable to raise the total revenue margins. Since all these three organizations mainly deal with TV, internet, or phone, they are to essentially increase the number of subscribers each year to improve profitability. The profound increase in revenues seems to be one of the potential competitive advantages of Comcast. Notably, the rate of increase in Comcast’s total selling/general/administrative expenses is satisfactory as compared to its revenue-earning rate. In my opinion, Comcast Corporation would strongly come back despite its current decline in net income.

Conclusion

In short, the above analysis reveals the notable differences in the financial statement composition of Comcast, DirecTV, and Verizon. The steady increase in Comcast’s total revenue indicates the stability of its business operations. Better financial data also add to the long-term sustainability of the company.