EchoStar Reports Higher Q2 Sales, Lower Net Income

Steve Smith -- TWICE, 8/10/2006

Englewood, Colo. — EchoStar Communications reported higher revenue but a steep decline in net income for the second quarter ended June 30.

EchoStar reported total revenue of $2.46 billion, a 17 percent increase vs. the corresponding period last year. But net income was $169 million for the quarter, compared with net income of $856 million during the corresponding period in 2005. EchoStar said net income for last year’s second quarter included a non-recurring, non-cash benefit of about $593 million to recognize the tax benefits of previously reported tax losses.

Its DISH Network added about 195,000 net new subscribers in the quarter, down from 225,000 in the same period last year, with the total number of subscribers as of June 30 at 12.46 million.

In a conference call with analysts, Echostar executives called the quarter a strong one and noted that the company’s performance outperformed Wall Street expectations for the quarter. Increased efficiency and growing HD penetration led to a 7 percent increase in average revenue per unit, reported company treasurer Jason Kaiser.

Looking forward, vice chairman Carl Vogel acknowledged that the company continues to explore ways to extend service options to consumers, but nothing is imminent. “We are looking at ways to utilize our platform for mobile and wireless options.”

When asked about the slow sales of the first generation of PocketDISH portable media players, which debuted late last year, Vogel admitted that the company has not put a lot of marketing money behind the line as it is “working with Archos [the manufacturer] to enhance interaction and usability for consumers.”

Conspicuous in his absence from the conference call was chairman/CEO Charlie Ergen, who Vogel said was “on a long planned family vacation.” One analyst questioned whether anything could be read from Ergen’s nonappearance, given this week’s speculative din on Wall Street over rumored DISH/DirecTV merger talks, as well as previous statements by Ergen of his intentions to eventually take on a lesser role for himself in the day-to-day operations of the company he founded in 1980.

“I wouldn’t take that as any indication of any lack of interest in the business by our chairman. [He] is totally engaged,” said Vogel. “There is only one Charlie Ergen — thank God,” he added. — Additional reporting by John Laposky