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DISH Network Corp. ( DISH - Analyst Report ) declared mixed financial results for the fourth quarter of 2012. Most importantly, the company generated net subscriber addition in the reported quarter, reversing the trend of the prior two successive quarters. In the fourth quarter of 2012, DISH Network gained 14,000 net subscribers. At the end of 2012, DISH Network had approximately 14.056 million subscribers, up 0.6% year over year.
Quarterly GAAP net income was $209.1 million or 46 cents per share compared with $312.7 million or 70 cents per share in the year-ago quarter. Fourth-quarter 2012 earnings per share of 46 cents were way below the Zacks Consensus Estimate of 56 cents. Quarterly total revenue inched down 0.01% year over year to $3,589.5 million but surpassed the Zacks Consensus Estimate of $3,565 million.
Segment wise, in fiscal 2012, Subscriber related revenue was $13,085.9 million, up 0.8% year over year. Equipment and merchandise sales & other revenue were $1,162.7 million, up 12.2% year over year. Equipment sales, services, and other revenue from EchoStar were $17.9 million, down 50.9% year over year.
Average monthly subscriber churn rate in 2012 was 1.57% compared with 1.63% in 2011. Average revenue per user in 2012 was $77.10 compared with $76.45 in 2011. Average subscriber acquisition cost in 2012 was $784 compared with $771 in 2011.
In fiscal 2012, Subscriber-related expenses increased 6% year over year to $7,254.5 million, driven by higher programming content costs and expenses related to call center operations. Subscriber acquisition cost jumped 12.1% year over year to $1,687.3 million. Depreciation and amortization expenses were $983 million, up 6.6% year over year.
General and administrative expenses grew 9.6% year over year to $1,353.5 million on higher personnel costs and professional fees to support the network. Full year 2012 operating income plunged by 58.3% to $1,221.8 million, while operating margin declined to 9.3% from the year-ago level of 22.6%. Accordingly, EBITDA was over $2,364.1 million in fiscal 2012, down 38.7% year over year.
During 2012, DISH Network generated $2,011.9 million of cash from operations compared with $2,573.9 million in 2011. Free cash flow (cash flow from operations less capital expenditures) in 2012 was $1,054.3 million compared with $1,795 million in 2011.
At the end of 2012, DISH Network had $7,356.8 million of cash and marketable securities and $11,639 million of outstanding debt on its balance sheet compared with $2,040.8 million of cash and marketable securities and $7,493.8 million of outstanding debt on its balance sheet at the end of 2011.
Other Stocks to Consider
DISH Network currently has a Zacks Rank #3 (Hold). Other stocks to consider in the U.S. pay-TV industry are Comcast Corp. ( CMCSA - Analyst Report ) , DIRECTV Inc. ( DTV - Analyst Report ) and Time Warner Cable Inc. ( TWC - Analyst Report ) . While Comcast’s net earnings slightly fell below the Zacks Consensus Estimate in the most recent quarter, both DIRECTV and Time Warner Cable beat the same. However, Comcast and DIRECTV currently have a Zacks Rank #3 (Hold) while Time Warner Cable has a Zacks Rank #5 (Strong Sell).
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