It’s believed to be the first time that DirecTV has lost subscribers in the U.S., and the drop — of 52,000 to 19.9M — was bigger than many analysts expected. In Q2 the satellite company generated $716M in net income, +1% vs last year, on revenues of $7.2B, +9.5%. The revenue figure is right about what the Street anticipated. But earnings at $1.09 a share were short of the $1.14 consensus figure. (There’s no mention of the recent battle with Viacom, which took place in Q3.) DirecTV says that the U.S. sub loss reflects its “greater focus on higher quality subscribers and stricter credit policies.” Expectations aside, the numbers weren’t bad: Revenues from the U.S. operation were +7% to $5.6B with an operating profit of $1.2B, +19.7%. And DirecTV’s Latin America operations were surprisingly strong. They gained 645,000 subscribers, for a total of 9.1M. Revenues there at $1.5B were +20.3%, but unfavorable exchange rates especially with Brazil and Argentina resulted in a 7% drop in operating income to $224M. “DirecTV’s strong second quarter consolidated results reflect the unique benefits from our diversified portfolio of businesses which are driving industry leading top-line and bottom-line results,” CEO Mike White says. The company’s share price is down about 4% in pre-market trading.
The stock is down slightly in pre-market trading after the No. 1 satellite company issued a Q1 earnings report that seems to justify the cases for both bulls and bears. DirecTV generated net income of $741M, up 8.5% vs the period last year, on revenues of $7.05B, up 11.5%. Analysts expected revenues to be just a little higher, at $7.06B. But earnings of $1.07 a share were a penny ahead of forecasts. DirecTV ended the period with nearly 20M U.S. subscribers, up 81,000. Analysts were looking for a jump closer to 86,000 — and some were as high as 115,000. That would still be down from early 2011, when DirecTV added 184,000 customers. The picture was brighter in Latin America, where the company added 593,000 subs for a total of 8.5M. DirecTV says that earnings were tempered by increasing programming costs, along with increased spending to retain U.S. customers. CEO Mike White says that “our industry leading revenue and earnings growth continues to be driven by the strength of our premier brands, popularity of our differentiated product and service offerings, and an enhanced focus on achieving operational excellence through effective cost management.”
UPDATE, 11:30 AM: DirecTV shares are up 6.3% after it reported better-than-expected sub growth in 3Q — and a three year extension of its deal with AT&T to sell co-branded TV, broadband, and wired and wireless phone services in 22 states. The agreement, which now runs through March 2015, covers areas where AT&T does not offer its U-verse video service. There’s “no material change” in the terms, DirecTV CEO Mike White told analysts in a conference call. He added that it’s “too soon to say” whether DirecTV will offer more bundles with Verizon broadband services. ”The question will be how customer friendly the (Internet usage) caps are.” White says he talks to everybody about packaging broadband service with DirecTV — and that could include Dish Network if it uses the wireless spectrum it’s amassing to sell a wireless Internet service. DirecTV is “thinking
UPDATE: DirecTV Shares Fall In Early Trading; Concerns About Slowing U.S. Growth Outweigh Strong 2Q Results
UPDATE, 7:15 AM: Investors appear to be more concerned this morning about DirecTV’s potential weakness in the U.S. than they are with its better-than-expected financial performance in 2Q. The stock price is down 6% in early trading. “Unfortunately, the picture in the U.S. isn’t all that appealing,” says Bernstein Research analyst Craig Moffett. Subscriber growth is “unmistakably slowing,” he adds: The 26,000 pickup in domestic subscribers for the quarter is DirecTV’s lowest ever and constrasts with 100,000 a year ago.
PREVIOUS, 5:28 AM: The No. 1 satellite company reported 2Q net income of $701M, up 29% vs the same period last year, on revenues of $6.6B, up 12.9%. Earnings at 91 cents a share handily beat the 85 cents that analysts forecast. They expected revenues to come in at $6.5B. The company says it ended June with 19.4M subscribers, up 4% from a year ago. Higher prices for subscriptions and leased set-top boxes outweighed the promotional discounts. The company also saw big improvements in Latin America where DirecTV has 6.7M subscribers, up 28% from last year. The growth efforts abroad “did not come at the expense of profitability,” CEO Mike White says. But he warned that the “challenging economic and competitive landscape continues to impact DirecTV U.S.”