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Hughes issues 2Q warning
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June 11, 2001: 5:03 p.m. ET
GM unit warns of subscriber slowdown for 2Q and full year, to add only 175K in 2Q
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NEW YORK (CNNfn) - Hughes Electronics Corp. warned Monday that a subscriber slowdown at its DirecTV satellite business has caused it to lower its second quarter and full year earnings guidance.
DirecTV expects to add 175,000 subscribers in second quarter, half of the 275,000 to 350,000 it had previously forecast while revenue will stay at $1.35 billion to $1.4 billion. For the full year, Hughes said the unit will add only 1.3 million subscribers, down from the 1.5-1.7 million anticipated.
Revenue will stay at $1 billion with earnings before taxes (EBITDA) in the $80 million to $100 million range expected for second quarter, the company said. Full year 2001 revenues are only anticipated to grow 20 percent, with earnings before taxes seen in the $575 million to $650 million range.
"Sales at our national consumer electronics retailers, which are our primary distribution outlets for DirecTV Systems, have been slower than we expected, in large part due to the softening economy," Hughes CEO Jack Shaw said in a statement. "In addition, we are seeing continued slowing in the contribution of subscribers from the rural markets that are served by the National Rural Telecommunications Cooperative (NRTC)."
El Segundo, Calif.-based Hughes (GMH: down $0.50 to $22.60, Research, Estimates) is a unit of General Motors Corp. (GM: up $0.04 to $59.14, Research, Estimates) Hughes owns DirecTV, the No.1 satellite-television broadcaster. General Motors Corp. is currently in talks with Rupert Murdoch's News Corp. Ltd. on a deal that would combine Hughes and Sky Global Networks.
Hughes did not include earnings guidance. Wall Street analysts expect Hughes to report a profit of 11 cents for second quarter and 40 cents for the year, according to earnings tracker First Call,
Hughes also adjusted guidance for DirecTV Latin America. The unit will add only 25,000 subscribers in second quarter, down from 100,000, and 350,000 forecast for the year. Second quarter revenue is still seen at $180 million while full year revenue is expected to be $750 million, down 6.2 percent from prior guidance. 
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