Tirconnell
09-21-2007, 04:49 PM
EchoStar Continues to Shine Amidst Competition
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With a weak housing market, the nationwide (global, really) credit squeeze and mounting competition in the video sector, EchoStar continues to outshine its pay-TV competitors on many fronts. That's the latest word from some analysts who say the DISH Network operator is not being affected by market threats as much as once believed.
According to Wedbush Morgan's William Kidd, the research firm is revising its third-quarter estimates on DISH because the company's fundamentals have been "surprisingly good" given the increased competition from DIRECTV, cable operators and the ever-mounting threat from fiber-delivered TV via Verizon and AT&T. And, the analyst said, considering that most cable companies have already launched triple-play services throughout the nation, the potential for further incremental losses has greatly lessened.
Kidd also said he is encouraged by DISH's potential improvement in free cash flow per share next year with the investment firm projecting it to rise nearly $2.50 per share in 2008 from about $1 this year. Most of the gains, he said, should stem from a larger subscriber base. However, Kidd added that AT&T's looming decision to use either EchoStar or DIRECTV as a sole-distributor remains an important potential catalyst/risk that investors should expect to be resolved within the coming months.
WedBush is "marginally" raising its third quarter subscriber estimates for the company, saying its prior estimates "looked too conservative as if they accounted for too much of a competition-related drop-off." Kidd said the firm is raising its gross adds estimate to 968,000 from 948,000 for a 1 percent year-over-year growth. With the company maintaining its churn estimates, WedBush's new gross adds estimate increased its net adds estimate to 264,000 from 245,000.
The analyst said he expects DISH to report slightly higher third-quarter ARPU due to increased penetration of advanced services like high-definition and DVRs. "With recent HD channel additions, EchoStar maintains its title as the market leader in HD programming... but not for long," he said. "EchoStar's HD advantage will soon be challenged by DIRECTV, which we expect will launch 60-70 HD channels within the next two weeks, followed by (about) 10 more sometime in October."
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With a weak housing market, the nationwide (global, really) credit squeeze and mounting competition in the video sector, EchoStar continues to outshine its pay-TV competitors on many fronts. That's the latest word from some analysts who say the DISH Network operator is not being affected by market threats as much as once believed.
According to Wedbush Morgan's William Kidd, the research firm is revising its third-quarter estimates on DISH because the company's fundamentals have been "surprisingly good" given the increased competition from DIRECTV, cable operators and the ever-mounting threat from fiber-delivered TV via Verizon and AT&T. And, the analyst said, considering that most cable companies have already launched triple-play services throughout the nation, the potential for further incremental losses has greatly lessened.
Kidd also said he is encouraged by DISH's potential improvement in free cash flow per share next year with the investment firm projecting it to rise nearly $2.50 per share in 2008 from about $1 this year. Most of the gains, he said, should stem from a larger subscriber base. However, Kidd added that AT&T's looming decision to use either EchoStar or DIRECTV as a sole-distributor remains an important potential catalyst/risk that investors should expect to be resolved within the coming months.
WedBush is "marginally" raising its third quarter subscriber estimates for the company, saying its prior estimates "looked too conservative as if they accounted for too much of a competition-related drop-off." Kidd said the firm is raising its gross adds estimate to 968,000 from 948,000 for a 1 percent year-over-year growth. With the company maintaining its churn estimates, WedBush's new gross adds estimate increased its net adds estimate to 264,000 from 245,000.
The analyst said he expects DISH to report slightly higher third-quarter ARPU due to increased penetration of advanced services like high-definition and DVRs. "With recent HD channel additions, EchoStar maintains its title as the market leader in HD programming... but not for long," he said. "EchoStar's HD advantage will soon be challenged by DIRECTV, which we expect will launch 60-70 HD channels within the next two weeks, followed by (about) 10 more sometime in October."