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DirecTV Helps Hughes Narrow Loss for Quarter

Earnings: The results come even as growth in new subscribers to the satellite TV service is not as strong as expected.

July 16, 2002|From Times Wire Services

Hughes Electronics Corp. narrowed its losses in the second quarter because of growth in its DirecTV business and lower costs to acquire subscribers, but subscriber growth was not as strong as expected.

The company, based in El Segundo, reported a net loss of $155.1 million, including interest expenses of $122.3 million, compared with a loss of $156.5 million in the same period last year. On an operating basis, without interest expenses, the company reported a loss of $138.5 million, compared with a loss of $223 million a year earlier.

Hughes, a unit of General Motors Corp., does not report earnings per share. GM agreed last year to sell Hughes to rival EchoStar Communications Corp. in a $25.8-billion deal that remains under review by federal regulators.

The company's cash flow and revenue beat guidance announced last quarter.

Net subscriber additions, the lifeblood of pay television companies, totaled 202,000 at DirecTV, up 53% from a year earlier but missing expectations of 225,000 to 250,000.

The satellite service lost more customers than it had anticipated when it eliminated its lowest-priced package and required subscribers who bought subsidized packages to sign one-year contracts.

"We're a little disappointed in the subscriber numbers at DirecTV, but it's not something to slit your throat over," Chief Executive Jack A. Shaw told Reuters. "If you look at the other numbers associated with the company, they overwhelm the subscriber numbers."

Shaw said the firm was maintaining its full-year forecast of 1.2 million more subscribers.

Hughes said second-quarter earnings before interest, taxes, depreciation and amortization totaled $123.1 million, compared with $82 million a year ago, beating the high end of its EBITDA guidance announced last quarter of $80 million to $110 million.

Revenue for the quarter rose 11% to $2.21 billion, beating the company's previous guidance of $2.1 billion to $2.2 billion.

For the third quarter, Hughes said it expected EBITDA of $175 million to $225 million and revenue of $2.2 billion to $2.25 billion. The company expects to add 250,000 to 300,000 subscribers in the third quarter.

Hughes nudged its full-year DirecTV revenue forecast higher to $6.3 billion from $6.2 billion. It expects EBITDA to be in a range of $525 million to $545 million, compared with its earlier expectation of $525 million.

The Hughes Electronics tracking stock rose 32 cents to $10 a share, and shares of General Motors gained $1.32 to $47.92. Both trade on the New York Stock Exchange.

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