Analyst Tom Watts says EchoStar's financial results reflected lower-than-expected net additions, much lower average revenue per user, and higher churn. EchoStar posted 285,000 net additions, below his $295,000 estimate; this is a surprise in light of cable's negative-to-flat basic subscriber additions in the third quarter, although he thinks some of DirecTV's 326,000 subscribers could have come from EchoStar.
Watts says the average revenue per user difference ($50.70, vs. his $51.70 estimate) is due to a rise in the amount of free and discounted programming. He cut the 60 cents 2003 earnings per share estimate to 53 cents, cut the $1.15 2004 estimate to $1.08, and cut the $1.78 2005 estimate to $1.70. Watts says fundamentals are intact, and he looks for positive information during a Tuesday afternoon conference call.