EchoStar Profit Surges

Aug 9, 2005  •  Post A Comment

EchoStar Communications said Tuesday that its second-quarter profit soared to $856 million from $85 million a year ago, as a tax gain helped put a shine on a quarter that found the company missing many analysts’ subscriber growth projections.

Revenue rose 18 percent to $2.1 billion.

Much of the profit gain was linked to a $593 million one-time benefit.

The company added 225,000 subscribers in the quarter, which was off 33 percent from year-earlier subscriber growth and generally fell short of most analysts’ predictions that EchoStar would add between 240,000 and 270,000 new customers in the period.

Analysts attributed the miss to an increase in customer defections, or churn, which rose to 1.69 percent from 1.44 percent in the first quarter but was down slightly from the 1.71 percent rate of a year ago.

Another factor weighing on the subscriber growth numbers was SBC Communications’ apparent shift away from promoting the EchoStar satellite service as part of a bundle package of video, voice and high-speed data services that was formed last year to more effectively compete with cable’s three-product offering. SBC is gearing up to offer its own video product early next year, and according to EchoStar officials, has already begun de-emphasizing its relationship with the satellite company, signing up just 10,000 new customers in the second quarter.