MAY 10, 2010, 2:29 P.M. ET Dish Earnings Fall 26%; Echostar Swings to Profit
By ROGER CHENG Wall Street Journal http://online.wsj.com/article/SB10001424052748703880304575235851575477316.html?mod=WSJ_Tech_LEFTTopNews Dish Network Corp.'s first-quarter profit fell 26% on higher costs related to adding more customers, signaling that the satellite-TV provider is on firmer ground with its turnaround. Dish, long a runner-up to larger rival DirecTV Group Inc., posted its fourth consecutive quarter of subscriber growth, thanks to aggressive pricing and improved customer service. The improvement illustrates the company's ability to weather intensifying competition from telecommunications and cable providers, who are able to offer bundles that also include Internet and phone services. "The strong results demonstrate further fundamental improvement," said Mike McCormack, an analyst at J.P. Morgan. Dish reported first-quarter income of $231 million, or 52 cents a share, compared with a year-earlier profit of $313 million, or 70 cents a share. Revenue rose 5% to $3.06 billion. Analysts, on average, had projected earnings of 50 cents a share on revenue of $3.05 billion. In midafternoon trading on Nasdaq, Dish shares were up 52 cents, or 2.4%, at $21.83. The Englewood, Colo., company, which generally targets lower-income customers, added a net 237,000 new customers in the quarter, reversing a loss of 94,000. The growth eclipsed that of DirecTV, which posted a multiyear low of 100,000 net new subscribers in the same quarter, underscoring the growing awareness of Dish. "I'm pleased we're in the conversation with DirecTV," said Chief Executive Charles Ergen. "Last year, we weren't in the conversation." The new customers raised Dish's outlays for marketing, installation of equipment, such as television set-top boxes, and customer promotions. Dish improved several other parts of the business. The rate of customer turnover fell to 1.4%, its lowest point since the first quarter of 2003. The company also was able to charge a higher average monthly bill to its customer base of 14.3 million customers. "Taken together, the results are a generally positive step, albeit not yet a definitive one, in the direction of turnaround," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. Sister company Echostar Corp., meanwhile, posted a profit of $72 million, or 85 cents a share, reversing a year-earlier loss of $1 million, or 1 cent a share. Its revenue rose 31% to $627 million. Echostar, which makes set-top boxes, relies on Dish for most of its business. At midafternoon, Echostar shares were up 72 cents, or 4%, at $18.77 on Nasdaq. Both Dish and Echostar are involved in patent litigation with TiVo Inc. over their use of digital-video-recording technology. Mr. Ergen declined to get specific about the proceedings, which have gone in TiVo's favor, but he noted that Dish and TiVo are "joined at the hip." "There is a logic to us working together," he said. While the company isn't in talks, he said he has a lot of respect for TiVo's work. Earlier this year a federal appeals court reaffirmed TiVo's patents, which could ultimately force the two companies to pay royalties for their use of TiVo's "time-warping" digital-video technology. In the first quarter, Dish increased its total reserve to cover potential damages to $424 million, including $361 million in supplemental damages and $30 million in interest. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
