Dish Plummets to Lowest in 25 Years After Massive Earnings Miss
(Bloomberg) -- Dish Network Corp. plunged to the lowest level in 25 years after posting third-quarter earnings that fell well below Wall Street’s expectations and reporting steep customer losses.
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Dish reported a 26-cent loss per share in the quarter, while analysts were projecting earnings of 6 cents for the provider of mobile service and satellite TV programming. The satellite TV provider has been transitioning to the wireless broadband business, but even on that front, the company disappointed: It lost nearly five times as many mobile customers as analysts had predicted.
The earnings report “is astonishingly bad,” MoffettNathanson LLC said in an earlier note. “The overwhelming probability here has always been that Dish would enter bankruptcy sometime in the next few years,” the firm said in its note, and “today’s results likely accelerate that.”
Shares fell 37% to close at $3.44 in New York on Monday, marking the lowest settlement price since 1998 and the stock’s worst single-day plunge ever. It was among the worst-performing stocks of the day.
Like other pay-TV providers, Dish has bled subscribers as viewers reject expensive channel packages and turn to streaming options. To stem its steady descent, the company has worked to shore up its wireless broadband, mobile and 5G business, acquiring spectrum from T-Mobile US Inc. and selling its Boost Mobile and Boost Infinite products through major retailers like Walmart Inc. and Amazon.com Inc.
In a bid to bolster Dish as a mobile network, co-founder and Chairman Charlie Ergen announced plans in August to merge Dish with EchoStar Corp., the satellite network operator it once owned, in an all-stock deal valued at about $4 billion.
Monday’s results suggest an uphill battle lies ahead. In its statement, Dish said third-quarter revenue was $3.7 billion, below analysts’ estimates of $3.8 billion.
The company’s results “show challenges to making headway in the wireless market” against heavyweights including AT&T Inc., Verizon Communications Inc. and T-Mobile, Bloomberg Intelligence Senior Analyst John Butler wrote in a note Monday. The merger with EchoStar may provide enough capital to complete Dish’s network, but it won’t solve the formidable competitive or technical hurdles it faces, he said.
Also weighing on the company is debt exceeding $20 billion. Rising borrowing costs have left it struggling to finance the buildout of its wireless network.
The company’s retail wireless subscriber base decreased by 225,000, compared with an expected loss of 46,000. The drop left Dish with 7.5 million retail wireless subscribers. Dish’s pay-TV business, both from satellite and its Sling brand, lost 64,000 subscribers. That compared with an expected loss of 46,000.
As part of the merger, Chief Executive Officer Erik Carlson will depart Nov. 12, the company said in its statement Monday. EchoStar head Hamid Akhavan will become president and CEO of the combined company the following day. The personnel changes were disclosed earlier by Ergen in an investors’ call.
The EchoStar transaction is expected to close by year’s end, according to Ergen.
Liberty Latin America Ltd. on Monday said it is buying Dish airwaves rights in Puerto Rico and the US Virgin Islands — and about 120,000 prepaid mobile subscribers in those markets — in exchange for cash and international roaming credits.
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