Strong fourth-quarter subscriber growth at satellite provider DirecTV helped pump up the results of parent company Hughes Electronics.
DirecTV finished 2001 with 10.7 million subscribers after adding a total of 405,000 net new subscribers in the fourth quarter. That surge helped push up Hughes's fourth-quarter revenue by 11%, to $2.28 billion, up from $2.06 billion in the same period last year.
The fourth-quarter subscriber figures, released earlier this month, came in better than most analysts expected.
Losses at DirecTV's new high-speed Internet access unit contributed to an overall net loss for the quarter. Also included in the fourth-quarter results was a charge of $29 million at DirecTV Latin America related to the recent devaluation of the Argentine peso.
Hughes, a unit of General Motors, posted a net loss of $132.6 million compared with net income of $1.06 billion in the same period last year. Those results included a big gain from the sale of a satellite manufacturing business to Boeing.
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 23%, to $118.2 million, down from $153.8 million last year. Analysts expected the company to report EBITDA of about $114 million.
?Coming on the heels of the strong performance demonstrated in the third quarter, results in the fourth quarter demonstrated that the improvement during the third quarter was more than merely dressing up the company for sale,? said John Stone, an analyst at Ladenburg Thalman, in a research note, referring to the merger of DirecTV and EchoStar Communications.
During the third quarter, DirecTV added about 425,000 net new subscribers, outpacing estimates. That number raised concerns over subscriber-acquisition costs, which remained high. DirecTV paid about $560 in acquisition costs per subscriber, about equal to the $563 it paid in the third quarter. Stone notes, however, that later in the quarter DirecTV began more heavily promoting its service through direct sales channels, reducing its reliance on outside vendors, which are subsidized.
Hughes reiterated its outlook for $9 billion to $9.2 billion in revenue this year and between $750 million and $850 million in EBITDA. Management also said it expects to add between 1 million and 1.2 million net new subscribers in 2002.
Hughes CEO Jack Shaw, speaking on a conference call with analysts, also addressed the DirecTV-EchoStar merger, expressing his confidence that regulators would approve the $30 billion merger, despite the threat of a rash of suits to be filed in opposition to the merger.
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