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Hughes in red from deals
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October 13, 1999: 1:58 p.m. ET
3Q loss, less than expected, due to costs of USSB, PrimeStar acquisitions
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NEW YORK (CNNfn) - Hughes Electronics Corp. Wednesday posted a smaller loss in the third quarter than expected by analysts, as strong growth in satellite television subscribers helped make up for part of the increased expenses related to recent acquisitions.
Hughes (GMH), a wholly owned subsidiary of General Motors Corp. (GM) that has its own tracking stock, reported a loss of $29.6 million, or 13 cents a share, compared to net income of $42.9 million, or 11 cents a share, in the year ago period.
Analysts surveyed by First Call expected a 16 cent loss for the company in the third quarter.
Revenue rose 31.5 percent to $1.99 billion in the quarter. Most of the growth came from direct broadcasting, where revenue more than doubled to $1.1 billion from $459.1 million a year ago. Earnings before interest, taxes, depreciation and amortization in the division was $47.7 million in the quarter, compared to a $30.6 million EBITDA loss in the year ago period.
"Our U.S. DirecTV business also drove our EBITDA growth in the quarter," said Michael Smith, Hughes' chairman and chief executive. "We have reached the point where the EBITDA generated by our large subscriber base is outpacing the marketing costs associated with our record subscriber growth. We expect our U.S. DirecTV business to continue to deliver positive EBITDA that accelerates yearly on a going-forward basis."
Hughes announced plans in December to buy United States Satellite Broadcasting Co. in a stock deal then valued at $1.3 billion. It followed that in January with a $1.82 billion cash and stock deal for PrimeStar Inc, another satellite television provider.
For the first nine months of the year, the company had a net loss of $43.6 million, or 17 cents a share, compared to net income of $143.5 million, or 36 cents a share, in the same period of 1998.
Despite the smaller-than-expected loss, Hughes stock was down 1 in early afternoon trading at 64-1/4, with half of that loss coming at the opening.
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