EchoStar's Costly Customers: Fool by Numbers

On Nov. 7, satellite TV service provider EchoStar (Nasdaq: DISH  ) released third-quarter 2006 earnings for the period ending Sept. 30, 2006.

  • The sales growth didn't translate into profits, thanks to higher cost of sales and a hefty increase in tax payments. The company added another million subscribers in the interim for a total of 12.8 million, and they don't come cheap.
  • The fatter cash balance looks good, until you realize that there's an increase in long-term debt. But free cash flow is at least positive -- satellite TV is just a very capital-intensive line of business.
  • You have to appreciate generous share buybacks like EchoStar's. Decreasing your share count by nearly 8% in a year is a very shareholder-friendly thing to do.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$2,440

$2,471.4

$2,128.2

16.1%

Net Profit

--

$139.6

$208.9

(33.2%)

EPS

$0.38

$0.31

$0.43*

(32.6%)

Diluted Shares

446.4

483.8

(7.7%)

*as calculated

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

46.69%

48.07%

(1.38)

Operating Margin

11.40%

13.71%

(2.31)

Net Margin

5.65%

9.81%

(4.16)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$2,788.2

$1,517.5

83.7%

Accounts Rec.

$582.9

$471.0

23.8%

Inventory

$268.1

$236.3

13.5%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$299.1

$290.4

3.0%

Long-Term Debt

$6939.4

5905.2

17.5%

Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

$557.9

$504.6

10.6%

Capital Expenditures

$376.9

$315.2

19.6%

Free Cash Flow

$181.0

$189.4

(4.4%)



Find out why Fools always follow the money.

Related Companies:

  • DirecTV Group (NYSE: DTV  )
  • Comcast (Nasdaq: CMCSA  )
  • Time Warner (NYSE: TWX  )

Related Foolishness:

Time Warner is aMotley Fool Stock Advisorselection.Find more great stocks with afree 30-day trialof our premium newsletter service.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication,Fool contributorAnders Bylund had no position in any company mentioned. Fool rules are here.


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