DirecTV Beats Forecasts, Cuts Hughes’ Loss
Hughes Electronics Corp., the owner of DirecTV, on Tuesday said that its fourth-quarter loss narrowed as it added more customers at the No. 1 satellite-television service than analysts had forecast.
Hughes’ loss from continuing operations narrowed to $60.3 million from $283.7 million a year earlier as DirecTV added 527,000 subscribers. Hughes didn’t report per-share losses. Sales rose 21% to $2.06 billion, from $1.7 billion, the company said.
El Segundo-based Hughes, which is owned by General Motors Corp., is trying to convince television viewers that its satellite service is superior to cable. At the same time, General Motors has said it may spin off or sell Hughes.
“This report increases the stakes and makes it more attractive to a buyer,” Global Capital Markets analyst Stewart Kalter said. “There were concerns that they were starting to lose some momentum to cable, but this reaffirms that they are still growing and still have a hold on part of the TV audience.”
General Motors Class H shares, which track Hughes’ financial performance, rose $2.75, or 11%, to close at $26.70 in New York Stock Exchange trading. The shares fell 28% last year.
The number of new DirecTV subscribers and Hughes’ cash-flow results beat the forecasts of most analysts, Kalter said. Hughes said it earned $153.8 million before interest, taxes, depreciation and amortization.
Analysts’ estimates ranged from about $145 million to $150 million, said Kalter, who has a “buy” rating on Hughes shares.
General Motors has said it’s in talks to spin off or sell Hughes to increase the value of Hughes shares.
News Corp., the media company controlled by Rupert Murdoch, is cutting spending and investments to save funds for a possible $40-billion bid for DirecTV, the Financial Times reported Monday, citing unidentified company executives.
Hughes Chief Financial Officer Roxanne Austin said on a conference call that GM has talked with “multiple parties” regarding a possible transaction. She didn’t elaborate.
DirecTV, which accounts for 77% of Hughes’ revenue, had 9.5 million customers at the end of the quarter. For all of 2000, DirecTV added 1.83 million customers, 14% more than the 1.61 million it added in 1999.
Last month, Hughes said it will buy Telocity Inc. for $180 million to expand its high-speed Internet service. Austin said DirecTV this year will begin offering more wireless services, including combining digital TV with fast Internet access, to compete against digital cable.
