Hughes’ Loss Narrows on Investment Gain
Hughes Electronics Corp. dramatically narrowed its loss in the third quarter to $13.6 million, from $227.2 million a year earlier, as a result of improvements at the company’s DirecTV satellite unit and a one-time gain from investments.
The company’s revenue increased 5% in the quarter to $2.2 billion from $2.1 billion a year earlier. The company does not issue per-share results because it is a tracking stock of General Motors Corp.
But Hughes cut its revenue forecast for the full year because of currency devaluations affecting its Latin American DirecTV unit. Hughes said full-year revenue would be $8.9 billion to $9 billion, down from its earlier forecast of $9 billion to $9.2 billion.
The company also said its full-year earnings before interest, taxes, depreciation and amortization would be at the low end of a forecast of $750 million to $850 million.
Shares of the El Segundo-based satellite company fell 24 cents on Monday, to close at $8.52 on the New York Stock Exchange.
The stock has fallen 45% this year, in part because of doubts about the proposed acquisition of Hughes by its satellite-TV rival EchoStar Communications Corp.
Last week the Federal Communications Commission rejected the DirecTV-EchoStar deal because of monopoly concerns that would result by combining the nation’s only two satellite services. On Monday, Jack Shaw, Hughes’ chief executive, said the companies expect to file a revised merger proposal with the FCC and the U.S. Department of Justice as early as this week.
During the third quarter, Hughes continued to post disappointing growth at its DirecTV satellite unit.
DirecTV added 206,000 subscribers in the quarter, less than the company’s original estimates of 250,000 to 300,000 additional customers.
Hughes attributed the slowdown to a recent crackdown on piracy. DirecTV recently cut off service to 50,000 customers who were using counterfeit access cards to pirate premium TV shows.
DirecTV has been growing more slowly than its rival EchoStar and ended the third quarter with 10.92 million subscribers, up 10% from 9.92 million in last year’s third quarter. By comparison, EchoStar had 7.46 million subscribers as of June, up 23% from a year earlier.
But analysts said Hughes was able to increase revenue during the third quarter in part because of strong sales of its National Football League package and its pay-per-view telecast of the Oscar De La Hoya-Fernando Vargas boxing match.
Hughes’ quarterly results were helped by a pre-tax gain of $158 million from the sale of Thomson Multimedia stock. The company’s cash flow, excluding one-time charges, jumped to $141.8 million in the third quarter, up from $76.5 million a year ago.
For the first nine months, Hughes posted a net loss of $325.1 million, compared with a $489-million loss in the same period last year. Revenue increased 8% to $6.46 billion, up from $5.98 billion in the first nine months of 2001.
