DIRECTV (NASDAQ:DTV) released its second quarter earnings before opening bell this morning, missing estimates because of a shortfall in subscribers, mainly in Latin America. Net income was reported to be $1.18 per share or $660 million, compared to $1.09 per share of $711 million in the same quarter a year ago. Revenue rose 6.6 percent to $7.7 billion. The company posted a higher average revenue per user in the U.S.
Analysts had been expecting the company to report earnings per share of $1.33 on revenue of $7.75 billion for the quarter. Shares of DIRECTV’s stock dropped as much as 5 percent in premarket trading after the company’s report and continued falling 5 percent right after the markets opened. Until today, the company’s stock had been rising steadily since this year’s low of $48 per share in February.
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DIRECTV misses Latin American estimates by a wide margin
The satellite television provider pulled in just 165,000 subscribers in Latin America, although analysts had been expecting the company to report 426,500 subscribers in the region. Latin America has been considered by many to be DIRECTV (NASDAQ:DTV)’s biggest growth opportunity. Last year in the same quarter, the company added 645,000 subscribers in Latin America.
In the U.S., the company also lost more subscribers than expected. Subscribership declined by 84,000, although analysts had been expecting that the company would only lose 74,000 subscribers in the U.S. In all, the company reported a total of 20 million subscribers at the end of the June quarter—only slightly more than the 19.9 million subscribers it had at the end of the same quarter last year.
DIRECTV investigates Latin American operations
The biggest problem for DIRECTV (NASDAQ:DTV) in Latin America was the discovery that its operations there overstated subscribers in the region by 200,000. The company revealed this information in June through an internal investigation.
The company also recorded a $25 million pretax charge during the quarter for capitalized installation costs and also equipment still held by customers who terminated their service with DIRECTV.