DISH Network Inc. (DISH) declared better-than-expected first quarter 2010 financial results. Although the company’s quarterly earnings slipped 26% year-over-year on higher subscriber-acquisition costs, they topped the Zacks Consensus Estimate.
DISH Network reported first quarter earnings of $231 million or 52 cents per share, compared to $312.7 million or 70 cents in the year-ago quarter. Quarterly EPS of 52 cents was well above the Zacks Consensus Estimate of 49 cents.
Quarterly total revenue increased 5.2% to $3.06 billion, compared to $2.91 billion in the year-ago quarter. This was mainly due to a huge increase in subscriber-related revenue. Quarterly total revenue was also above the Zacks Consensus Estimate of $3.04 billion.
DISH Network added 237,000 new subscribers during the quarter, which raised its total subscriber base to 14.337 million at the end of the first quarter 2010. Subscriber growth was driven by sales and marketing promotions, as well as improved churn (customer turnover). However, growth in subscribers continued to be adversely affected by sluggish economic conditions, intense competition from rivals, fiber- and Internet-based pay TV operators and signal theft.
In the first quarter 2010 segment-wise, subscriber-related revenue was $3.04 billion, up 6% year-over-year. Equipment sales & other revenue was $13.83 million, down 57.2% year-over-year. Equipment sales (EchoStar) revenue declined 66% to $0.9 million, Transitional services and other (EchoStar) revenue was $6.52 million, up 21.8% year-over-year.
Quarterly, subscriber-related expenses increased 5.8% year-over-year to $1.64 billion. Subscriber acquisition costs rose by 41% to $412 million. TiVO litigation expenses were $30.2 million. General and administrative expenses grew 10.8% to $139.4 million on higher personnel costs and professional fees to support the network. Accordingly, operating income plunged 20.5% to $457 million, while operating margin slipped to 15%, from the year-ago level of 19.8%.
During the first quarter 2010, DISH Network generated $726 million in cash from operation compared to $901.2 million in the prior-year quarter. Free cash flow (cash flow from operations less capital expenditures) in the same quarter was $405.6 million compared to $649 million in the prior-year quarter.
At the end of the first quarter of 2010, DISH Network had $2.62 billion of cash and marketable securities and $6.49 billion in outstanding debt on its balance sheet, compared to $2.31 billion in cash and marketable securities and $6.5 billion in outstanding debt on its balance sheet at the end of fiscal 2009.
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