DIRECTV rides LatAm success to Q1 earnings surprise
Gabriel Miramar-Garcia | 08-05-2013
DIRECTV, the No 1 satellite operator in the United States and No 2 pay-TV operator overall behind Comcast, surprised analysts by beating earnings estimates in the first quarter, thanks to healthy growth in Latin America.
Analysts expected earnings of $1.07 per share on revenue of $7.5 billion, but it delivered $1.20 per share on revenue that jumped 8% to $7.58 billion.
The numbers are somewhat deceptive, however: net income was $690 million, down 5.6% from $731 million, or $1.07 per share, on one year ago. Per-share price was up because shares were constricted, but a devaluation of the Venezuelan currency in February resulted in a $166 million charge that hit the satco's earnings.
A bright spot for the company continues to be Latin America. Operating in Brazil, Colombia, Argentina, Venezuela, Chile and Ecuador, it is taking advantage of a lack of competition and a growing economy to add market share. Overall, DIRECTV added 583,000 subscribers in the region.
In the US, however, it added just 21,000 net subscribers to total 20.11 million. The company has made a shift to questing for 'high value' subs by tightening up credit requirements in order to ferret out higher income and credit-worthy households that would be more likely to take a higher tier package. The company also increased rates an average of 4.5% in February.
Wall Street liked the news overall: DIRECTV shares closed 6.9% higher at $61.95 on the Nasdaq on Tuesday. The stock is up about 30% from a February low.