Record Subscription Adds, Slowed Hardware Sales in Hughes’ Q3
Despite a company-record net increase of 17,000 satellite broadband subscriptions, Hughes Communications reported revenue of $251.4 million in Q3 this year, down 7.5 percent from the same period last year. A 32 percent revenue decrease at the telecom systems division was a major reason for the overall revenue decline, the company said. The company had net income of $15.6 million in the quarter, down from $18.4 million a year earlier.
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Revenue for the telecom systems business fell $29 million because several contracts were completed in Q3, the company said. But Hughes had $208 million in new orders from companies including Barrett Xplore, Burger King and Yum Brands. The company had an increase in contract delays during the quarter, largely because of the slowed economy, Kaul said.
ViaSat’s acquisition of WildBlue, Hughes’ main competitor, doesn’t change the market significantly, Hughes CEO Pradman Kaul said on a conference call Wednesday. After the acquisition, there will “still be two competitors” and WildBlue will use ViaSat technology and Hughes will use its own, he said.
The company’s satellite broadband hardware sales continued to drop, decreasing 34.5 percent from $114.8 million a year earlier. The decline resulted from the company’s changing its emphasis from hardware to broadband services, the company said. The company’s broadband services revenue grew 16 percent to $176.2 million.
Emerging LTE and WiMAX technologies may reach some of Hughes’ suburban customers, but they don’t pose a real threat, Kaul said. “Over the next five years” LTE and WiMAX providers “will be investing in infrastructure where the density is much higher than density where we are trying to provide service,” said Kaul.