Comcast (CMCSA) gave bad news yesterday. It earnings were poor and the growth of its digital cable and VoIP customers were more modest than expected. Comcast is the largest cable company in the US, so it has time to try to fix its problems and hold off the new voice/TV/broadband offerings from Verizon (VZ) and AT&T (T).

Still, Comcast’s shares were down over 10% to a 52-week low of under $21.

Smaller cable company Charter (CHTR) does not have the luxury of time and a strong balance sheet. Its shares dropped almost 20% yesterday to under $2. The 52-week high for the shares was close to $6.

Charter has long-term debt of over $19 billion. It stock is so low now that the company’s market cap is below $800 million. In the last reported quarter, Charter had operating income of $200 million on revenue of under $1.5 billion.

Charter does not have the capacity to go head-to-head marketing "triple play: services against the big phone companies. It does not have the money for capital expenditures to upgrade its infrastructure to the level that the phone companies can offer with their brand new fiber deployments. Their systems offer much faster connection speeds and can deliver many more HDTV channels.

Charter is running out of time. Perhaps more important, Charter cannot compete in the current market and pay its debt service. That means that the common shareholders are likely to get pushed down to zero.

Douglas A. McIntyre

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