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Hughes Profit Drops 18% in Third Quarter

Loss in DirecTV division grows even as number of subscribers increases. But results beat forecasts.

October 13, 1998|From Bloomberg News

Hughes Electronics Corp. said Monday that third-quarter earnings fell 18% as higher marketing costs more than offset rising subscriptions to its DirecTV satellite television service.

The El Segundo-based satellite maker said net income fell to $42.9 million, or 11 cents a share, from $52.4 million, or 13 cents, in the year-ago period. The company was expected to earn 10 cents a share.

Hughes, a unit of General Motors Corp., said the loss from its DirecTV unit widened to $61.8 million from $43.3 million, though the number of U.S. subscribers climbed 8% to 4.06 million.

Revenue rose 20% to $1.51 billion from $1.26 billion. DirecTV revenue increased 34% to $459.1 million from $343.7 million. Revenue at Hughes' three other units--PanAmSat Corp., satellite systems and network systems--also improved, the company said.

GM's Class H shares, which track Hughes' earnings, dividends and outlook, rose $2.31 to close at $36.75 on the New York Stock Exchange.

PanAmSat, Hughes' 81%-owned satellite services unit, said operating profit rose 10% to $79.1 million from $71.7 million. Revenue rose 9.5% to $186.5 million from $170.3 million.

The Greenwich, Conn.-based unit said net income rose 4.1% to $29.9 million, or 20 cents a share, from $28.8 million, or 19 cents. PanAmSat was expected to earn 18 cents a share, the average estimate of nine analysts polled by First Call Corp.

PanAmSat shares rose $1.69 to close at $36.75 on Nasdaq.

At a Glance:

* Pasadena-based EarthLink Networks Inc. narrowed its loss in the third quarter, beating analysts' estimates, as the sixth-largest Internet service provider's subscribers surged 15%. The company's loss was $1.07 million, or 4 cents a share, before the amortization of assets acquired when it combined its Internet service with Sprint Corp.'s. A year ago, it had a loss of $7.2 million, or 36 cents a share. The company was expected to lose 12 cents. Revenue more than doubled to $49.8 million from $21.0 million.

* Broadcom Corp., which makes chips used in computer networking equipment, reported a third-quarter profit slightly higher than forecasts on surging sales. Irvine-based Broadcom said net income for the quarter ended Sept. 30 was $8.2 million, or 17 cents a share, contrasted with a loss of $1.8 million, or 7 cents, a year ago. The company was expected to earn 16 cents a share. Broadcom revenue rose more than fivefold to $52.5 million from $9.3 million.

* San Jose-based Novellus Systems Inc. reported better-than-expected third-quarter earnings of $7.6 million, or 22 cents a share. While the semiconductor equipment maker's net income was down 62% versus the year-ago net income of $20.1 million, or 57 cents, it surpassed Wall Street's consensus estimate of 12 cents a share.

Third-quarter sales of $107 million were down 31% from year-ago sales of $155.1 million because of the ongoing semiconductor industry slump and the resulting slowdown in capital spending by chip makers who are buying less equipment.

* C-Cube Microsystems Inc., the world's largest maker of digital video computer chips, said third-quarter earnings rose 10% on strong sales of its satellite TV and set-top box chips. The Milpitas-based company earned $10.7 million, or 28 cents a share before a gain, compared with net income of $9.7 million, or 25 cents, in the year-earlier quarter, in line with estimates of 27 cents.

* San Jose-based Atmel Corp. said third-quarter earnings fell 86% as overhead expenses rose and prices fell for its memory chips. It reported net income of $4.2 million, or 4 cents a share, down from $30.3 million, or 30 cents, in the year-ago quarter. Analysts expected the company to earn 3 cents a share. Revenue rose 14% to $273.8 million from $240.1 million a year ago.


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