EchoStar flies higher with Dish

Q4 revenue, profit surge on 'impressive' sub gains

EchoStar Communications on Thursday reported better-than-expected subscriber and financial results for the fourth quarter, with investors bidding up the stock 5.1% after the earnings update.

The company posted revenue of $2.6 billion, up 17% from a year ago. Profit rose 15%, from $132.6 million to $152.6 million.

EchoStar said it added about 350,000 net subscribers to its Dish Network satellite TV service during the quarter ending Dec. 31, bringing its total user base to nearly 13.1 million. That marks an increase of 1.1 million subscribers for 2006.

"Subscriber results were very impressive," said Bear Stearns analyst Spencer Wang, who projected 286,000 additions. EchoStar added 330,000 Dish subscribers in the same quarter a year ago.

Overall, EchoStar's results "were ahead of expectations on virtually every operational and financial metric," he added.

EchoStar's churn, or subscriber turnover, was 1.5%, well below the 1.7% consensus estimate. During the quarter, EchoStar was forced to shut off distant network signals of several hundred thousand subscribers, which led many on Wall Street to expect higher churn.

Quarterly subscriber-acquisition costs came in at $425 million, also below analysts' expectations.

Prudential Equity Group analyst Katherine Styponias, while acknowledging the advantage that cable has over satellite because of its triple-play VOD abilities, stuck to her "overweight" recommendation on EchoStar shares Thursday.

"EchoStar would prove an attractive acquisition candidate," she said, adding that she believes the company would only fetch about $44 a share, not much more than the $42.68 they traded at Thursday after rising $2.08 during the session.

Executives on a conference call with analysts addressed their lack of a broadband Internet solution worthy of competing with cable and DSL.

"We haven't found anything that we see that is particularly compelling at this point," EchoStar president Carl Vogel said. "As you can tell from our results, we're pleased with our core business, but we do understand we probably need to get further along in the broadband going forward."

Georg Szalai reported from Aspen; Paul Bond reported from Los Angeles.