DISH Network Misses Earnings - Analyst Blog
May 09 2013 - 7:16AM
Zacks
DISH Network Corp. (DISH) – the second-largest
satellite operator in the U.S. after DIRECTV (DTV)
– declared first-quarter 2013 financial results where both its top
and bottom line missed the Zacks Consensus Estimate.
Most importantly, the company continues to maintain net
subscriber growth in the two successive quarters. In the first
quarter of 2013, DISH Network gained 36,000 net subscribers. At the
end of the first quarter of 2013, DISH Network had approximately
14.092 million subscribers, up 0.1% year over year.
Quarterly GAAP net loss was $215.6 million or 47 cents per share
compared with a net income of $360.3 million or 80 cents per share
in the year-ago quarter. First-quarter 2013 income per share of 47
cents was well below the Zacks Consensus Estimate of an income of
61 cents.
Quarterly total revenue was approximately $3,555.2 million, down
0.7% year over year and also below the Zacks Consensus Estimate of
$3,603 million. This poor performance was mainly due to weak
Equipment-related revenues.
Segment wise, quarterly Subscriber related revenues were
$3,352.6 million, up 4% year over year. Equipment and merchandise
sales & other revenues were $200.5 million, down 42.8% year
over year. Equipment sales, services, and other revenues from
EchoStar were $2.1 million, down 68.1% year over year.
Average monthly subscriber churn rate in the first quarter of
2012 was 1.47% compared with 1.35% in the prior-year quarter.
Average revenue per user in the reported quarter was $78.54
compared with $76.24 in the year-ago quarter. Average subscriber
acquisition cost in the first quarter of 2013 was $882 compared
with $747 in the year-ago quarter.
In the reported quarter, Subscriber-related expenses crept up
8.5% year over year to $1,911.6 million, driven by higher
programming content costs and expenses related to call center
operations. Total Subscriber acquisition cost increased 16.1% year
over year to $463.9 million. Depreciation and amortization expenses
were $234.3 million, up 12.3% year over year.
General and administrative expenses were down by 30.9% year over
year to $251.6 million. First-quarter 2013 operating profit was
$452.3 million compared with $572.4 million in the prior-year
quarter. Accordingly, quarterly EBITDA was just $686.6 million
compared with $781.1 million in the year-ago quarter.
During the first quarter of 2013, DISH Network generated $686.5
million of cash from operations compared with $858.6 million in the
prior-year period. Free cash flow (cash flow from operations less
capital expenditures) in the first quarter of 2013 was $375 million
compared with $689.7 million in the year-ago period.
At the end of the first quarter of 2013, DISH Network had
$7,095.1 million of cash and marketable securities and $11,343.2
million of outstanding debt on its balance sheet compared with
$7,237.7 million of cash and marketable securities and $11,350.4
million of outstanding debt on its balance sheet at the end of
2012.
DISH Network currently has a Zacks Rank #3 (Hold).
Our Take
DISH Network is slowly transforming itself from a low-priced
leader in the U.S. pay-TV industry to a premium service provider in
order to reduce its subscribers’ churn rate. Moreover, the plan to
deploy triple-play services coupled with increased rollout of its
popular hopper devices will help the company to not only drive
subscriber growth but at the same time counter stiff competition
from Netflix, Inc. (NFLX) and AT&T
Inc.’s (T) U-Verse pay-TV service.
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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