Back to top

Analyst Blog

Zacks Equity Research

NET Servicos Improves in 2Q11

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

NET Servicos de Comunicacao S.A. declared better-than-expected financial results for the second quarter of 2011. Quarterly net income was $78.2 million or 21 cents per share compared with net income of $35.4 million or 9 cents per share in the year-ago quarter. Net revenue (excluding connection cancellations and sales taxes), in the reported quarter, was approximately $1,020 million, up 24.4% year over year. The increase was mainly attributable to higher subscription revenue as the subscriber base enlarges.

Gross profit in the second-quarter 2011 was 37.7% compared with 38.4% in the year-ago quarter. Quarterly operating expenses were $255.2 million, up 17.5% over the prior-year quarter. As a percentage of revenue, operating costs decreased from 26.5% in the second quarter of 2010 to 25% in the second quarter of 2011. Quarterly operating margin was 12.7% compared with 11.9% in the prior-year quarter. Quarterly EBITDA was $291.4 million, an improvement of 24.2% year over year. EBITDA margin, in the second quarter of 2011, at 28.6% remained the same year over year.

During the first half of 2011, NET Servicos generated $462.5 million of cash from operations, up 22.3% year over year. Free cash flow (operating cash less capital expenditures) in the first half of 2011 was $80.4 million, up 1.3% year over year.

At the end of the second quarter of 2011, NET Servicos had approximately $383.2 million of cash and cash equivalents, down 25.5% from the end of 2010. Total debt, at the end of the reported quarter, was around $1,878.4 million, down 14.4% from the end of 2010. Debt-to-capitalization ratio at the end of the second-quarter 2011 was 0.30 compared with 0.35 at the end of fiscal 2010.

Recommendation

We maintain our long-term Neutral recommendation for NET Servicos. The company is facing stiff competition from Brasil Telecom S.A. , Tele Norte Leste Participacoes S.A. , and Telefonos de Mexico . Currently, NET Servicos holds a short-term Zacks #3 Rank (Hold) on the stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%