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May 12, 2008
DirecTV Still Rolling And I Missed It
DirecTV reported another strong quarter. Overcoming potential headwinds from the economy, the housing recession, and the loss of AT&T marketing in former BellSouth territories, DTV produced an across the board beat in its 1Q08.
EPS of 32 cents and revenues of $4.59 billion beat consensus estimates of 31 cents and $4.47 billion, respectively. EPS grew 18% and revenues grew 17%. EBITDA also came in ahead of expectations.
Both U.S. and Latin America contributed to the upside. US only revenues grew 14% with EBITDA up 22%. Latin America is definitely turning into a significant value generator for DTV shareholders. Revenues rose 47%, EBITDA rose 73%, and 200,000 new subscribers were added. Latin America accounts for over 10% of total DTV EBITDA.
The good financial results were matched by even better subscriber metrics....
....Net subscriber additions of 275,000 easily beat analyst estimates for around 200,000. The upside was driven by greater than expected gross additions and lower than expected churn. Flow through to financial results was boosted by higher than expected ARPU growth. ARPU is getting a boost from DVRs and HD. DTV also did a good job keeping a lid on its retention and subscriber acquisition marketing expenses. SAC was in line with estimates at $712.
On the ownership/capital structure front, DTV announced another $3 billion share repurchase to be financed mostly by debt. Liberty Media has agreed to keep its voting stake at 48% even though its economic ownership will rise above 50% if the buyback is completed. Eventually a merger with Liberty Entertainment and broadening of DTV's business to programming seems in the cards.
Posted by Steve Birenberg at May 12, 2008 02:41 PM in DTV
1 WHAT DO YOU THINK CAUSED THE SURGE IN WIRELESS SECTOR IN GENERAL AND MICC IN PARTICULAR THE LAST FEW DAYS?
2.WHAT DO YOU THINK CAUSED THE BEAR MARKET REVERSAL AT THE END OF THE DAY?
3.WHEN DO YOU THINK THE AMERICAN ANALYSTS WILL FULLY APPRECIATE CETV?
1. Not sure. Not any news I saw but the group has been back in favor and momentum names peaked today so probably just trading oriented.
2. We just got too aggressive and a bear raid was easy. Once it started it was easy to press as bulls had used up their dry powder earlier in the day. FWIW, I shorted some S&P futures very close to the high because I thought we extended. I covered half at the close and am holding half thinking we may have some follow through weakness in the morning.
3. Maybe never but I am not worried about it. I always prefer stocks that are under the radar. CETV's story will be played out by the time a bunch of US analysts form major firms start recommending it. Those are the guys that will get it to $200 by recommending at $160.
Posted by: Steve at May 14, 2008 08:42 PMDO YOU HAVE ANY IDEA WHEN THE MTN DEAL WILL MATERIALIZE? ITS SUCCESSFUL COMPLETEION WILL HAVE A VERY POSITIVE EFFECT ON THE WIRELESS INDUSTRY.
Posted by: MP at May 15, 2008 12:43 PMI have no new information on the MTN deal since the last time you brought it up. I do agree that a deal would serve the other stocks well.
Posted by: Steve at May 15, 2008 03:35 PM