Monday, November 7, 2011

Dish Sales, Profit Miss Analysts' Estimates on User Losses

Dish Network Corp., the second- largest U.S. satellite-television provider, reported third- quarter sales and earnings that trailed analysts’ estimates after losing video subscribers.

Earnings per share rose to 71 cents from 55 cents a year earlier, as sales increased 12 percent to $3.6 billion, the Englewood, Colorado-based company said today. Analysts projected earnings of 74 cents on sales of $3.63 billion, the average estimates compiled by Bloomberg.

Dish lost 111,000 customers, more than the 81,000 nine analysts projected on average. Chairman Charlie Ergen is trying to shed Dish’s image as a low-cost television provider and may accept losses if it can attract customers willing to buy more expensive packages and products, said Matthew Harrigan, an analyst at Wunderlich Securities in Denver.

“This is a transitional quarter, and I think Charlie doesn’t particularly care about the stock price,” said Harrigan, who has a “hold” rating on Dish. “The only way he starts caring is if he goes out and starts trying to do more deals. At some point, the stock price does start to matter again because it affects what he can do in the debt markets as well.”

Ergen purchased Blockbuster LLC, DSBD North America Inc. and Terrestar Networks Inc. this year, gaining capabilities that may allow him to offer new services including Internet video for mobile devices.

Dish fell 0.8 percent to $23.48 at the close on Nov. 4. The shares have risen 19 percent this year. The company said today it will pay a non-recurring dividend of $2 a share on Dec. 1. The company last paid a special dividend two years ago.

DirecTV’s Gain

The subscriber decline compares with DirecTV’s 327,000 increase in U.S. customers last quarter. DirecTV, the largest U.S. satellite-TV provider, offered its customers free access to all Sunday NFL games. Dish doesn’t own the same NFL rights.

Investors will be curious to hear if Dish Chief Executive Officer Joseph Clayton reveals any more details about the company’s wireless strategy, Harrigan said. The company has said little about its long-term plans to integrate its acquisitions, Harrigan said.

Clayton has said more deals and partnerships are likely still to come. In May, Ergen said Dish’s strategy was like an episode of “Seinfeld,” with all the parts coming together at the end.


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