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Hughes up on Boeing deal
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January 14, 2000: 12:25 p.m. ET
Sale of satellite business, spin-off rumors again push stock higher
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NEW YORK (CNNfn) - Shares of Hughes Electronics Corp. rose for the third consecutive day Friday as investors digested a $3.75 billion deal to sell its satellite business and renewed speculation the company might be spun-off to its shareholders.
One day after El Segundo, Calif.-based Hughes announced the multi-billion dollar deal to sell its satellite-making unit to Boeing Co., investors pushed shares of Hughes up 2-15/16 to 113-7/16 in late morning trading Friday.
The deal allows Hughes (GMH) to concentrate solely on its broadband, or high-speed, communications systems, which include the DirecTV network.
But it also renewed speculation that Hughes' parent company, General Motors Corp. (GM), will spin off the remainder of the company to its shareholders.
Michael Smith, Hughes' chairman and CEO, declined to comment on such speculation in an interview with CNNfn Friday.
"Anything we do is going to revive that speculation," he said. "I'm not going to add to that speculation. We'll just see what happens there."
Smith said the deal provided his company with much-needed funding to fuel growth in the most dynamic part of its business: direct television and business-to-business communications.
"This is a growth strategy," he said. "This segment is exploding. We're having trouble keeping up with the growth. We have to make sure things are in place to keep that going."
Analysts agreed.
"Not only does Hughes benefit from this transaction by making it more focused on its faster growth lines of business, but it sheds the company's riskiest line of business," said Thomas Eagan, an analyst with PaineWebber. 
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