DISH Network Corp. (DISH) declared weak financial results for the third quarter of 2012, way behind the Zacks Consensus Estimates. However, despite facing stiff competition from DIRECTV (DTV) and other cable TV and telecom operators, in the previous quarter, DISH Network lost a net total of 19,000 subscribers compared with a huge net loss of 111,000 subscribers in the year-ago quarter. At the end of the third quarter of 2012, DISH Network had approximately 14.042 million subscribers.
Quarterly GAAP net loss was $158.5 million or 35 cents per share compared with a net income of $319.1 million or 71 cents per share in the year-ago quarter. Second-quarter 2012 loss per share of 35 cents were well below the Zacks Consensus Estimate of an income of 55 cents.
Quarterly total revenue was approximately $3,523.3 million, down 2.2% year over year and also below the Zacks Consensus Estimate of $3,564 million. The poor performance was mainly due to weak Equipment-related revenue.
Segment wise, quarterly Subscriber related revenue was $3,267.4 million, up 1.2% year over year. Equipment and merchandise sales & other revenue were $251.9 million, down 30.4% year over year. Equipment sales, services, and other revenues from EchoStar were $4.1 million, down 63.8% year over year.
Average monthly subscriber churn rate in the third quarter of 2012 was 1.80% compared with 1.83% in the prior-year quarter. Average revenue per user in the reported quarter was $77.57 compared with $76.99 in the year-ago quarter. Average subscriber acquisition cost in the previous quarter was $805 compared with $789 in the year-ago quarter.
In the reported quarter, Subscriber-related expenses crept up 6.3% year over year to $1,810.8 million, driven by higher programming content costs and expenses related to call center operations. Subscriber acquisition cost increased 14.7% year over year to $453 million. Depreciation and amortization expenses were $235.4 million, up 2.7% year over year.
General and administrative expenses grew 13.7% year over year to $330.4 million on higher personnel costs and professional fees to support the network. Third-quarter 2012 operating loss was $273 million compared with an operating income of $624.9 million in the prior-year quarter. Accordingly, quarterly EBITDA was just $37.1 million compared with $874.4 million in the year-ago quarter.
During the first nine months of 2012, DISH Network generated $2,034 million of cash from operations compared with $1,991.2 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditures) in the first nine months of 2012 was $921,352.17.9 million compared with $1,397.2 million in the year-ago period.
At the end of the third quarter of 2012, DISH Network had $6,400.1 million of cash and marketable securities and $10,140.4 million of outstanding debt on its balance sheet compared with $2,040.9 million of cash and marketable securities and $7,493.8 million of outstanding debt on its balance sheet at the end of 2011.
We maintain our long-term Neutral recommendation on DISH Network. Currently, it has a short-term Zacks #3 Rank (Hold) on the stock.
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