DirecTV Falls After Profit, Sales Miss Analysts’ Estimates

DirecTV (DTV), the largest U.S. satellite-television provider, fell after reporting profit and sales that missed estimates as it added fewer Latin American subscribers than projected.

DirecTV declined 2 percent to $62 at the close in New York. The stock has gained 24 percent this year.

The Latin American business, seen as the company’s biggest source of growth, attracted 165,000 new subscribers, short of the 426,500 estimated by analysts. DirecTV lost 84,000 subscribers in the U.S., compared with a prediction that it would drop 74,000.

“In the near term, it’s clearly a disappointment to the market,” said Jaison Blair, an analyst at Telsey Advisory Group in New York. “It is very clearly a tougher quarter for subscriber trends.”

Net income fell to $660 million, or $1.18 a share, from $711 million, or $1.09, a year earlier, the El Segundo, California-based company said today in a statement. Analysts had estimated $1.34 a share on average, according to data compiled by Bloomberg. Sales rose to $7.7 billion, compared with a prediction of $7.74 billion.

The increase in earnings per share was a result of less stock outstanding. The company has repurchased $2 billion of stock this year as of June 30, according to the statement.

Chief Executive Officer Mike White said on a conference call that he would “never say never” to a merger with Dish Network Corp. (DISH), the second-largest U.S. satellite TV company.

Regulatory Climate

“I certainly believe that the industry landscape is dramatically different than it was 10 years ago, on any number of dimensions,” White said, citing escalating programming costs. Regulators blocked plans for a merger of the companies in 2002.

DirecTV said economic and operational challenges in Latin America, especially Brazil, affected results.

An internal investigation of DirecTV’s Latin American division found on June 27 that the company had overstated subscribers in Brazil by 200,000. DirecTV said it would record a $25 million pretax charge for capitalized installation costs and subscriber-related equipment held by terminated customers.

To contact the reporter on this story: Madeline McMahon in New York at mmcmahon26@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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