DIRECTV's Deluxe Development: Fool by Numbers

On Nov. 8, satellite TV service provider DIRECTV Group (NYSE: DTV) released Q3 2006 earnings for the period ended Sept. 30.

• DIRECTV U.S. added 750,000 net subscribers over the past 12 months, and the total customer count now stands at 15.7 million. That 4.5% subscriber growth translated into a beefy 13% total sales boost, and GAAP earnings went on an absolute tear.

• The dramatic improvement in operational efficiency came from tight cost control, and more specifically, $455 million of customer acquisition costs compared with $708 million last year. Keeping costs fixed while growing revenues is a great recipe for profits.

• The company prefers to fuel its business with pure cash and has not taken on any new debt in the past year.

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q3 2006	Q3 2005	Change
Sales	$3,610	$3,667.0	$3,233.2	13.4%
Net Profit	--	$370.2	$94.6	291.3%
EPS	$0.27	$0.30	$0.07	328.6%
Diluted Shares	--	1227.9	1395.5	(12.0%)

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

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	48.54%	49.80%	(1.26)
Operating Margin	17.13%	4.84%	12.29
Net Margin	10.10%	2.93%	7.17

*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.	$2,272.1	$4,225.2	(46.2%)
Accounts Rec.	$1,155.5	$889.2	29.9%
Inventory	$167.6	$237.0	(29.3%)

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable + Accrued Exp.	$2,457.1	$2,298.8	6.9%
Long-Term Debt	$3,397.5	$3,408.2	(0.3%)

Learn the ways of the balance sheet.

Cash Flow Highlights

	Q3 2006	Q3 2005	Change
Cash From Ops.	$874.5	$373.4	134.2%
Capital Expenditures	$554.8	$182.8	203.5%
Free Cash Flow	$319.7	$190.6	67.7%

Find out why Fools always follow the money.

Related Companies:

• EchoStar Communications (NYSE: DISH)
• Comcast (Nasdaq: CMCSA)
• Time Warner (NYSE: TWX)
• TiVo (Nasdaq: TIVO)

Related Foolishness:

• TiVo Spins Round and Round
• The Best Stocks for New Money

Time Warner and TiVo are Motley Fool Stock Advisor recommendations. Find more great investments with a free 30-day trial to our flagship service, where the Gardner brothers compete and everybody wins.

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 check Fool.com for more of our in-depth discussion of what the numbers mean.

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