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NEW YORK (Dow Jones)--Speaking publicly for the first time since reports about improper accounting emerged about EchoStar Communications Corp. (DISH), Chief Executive Charlie Ergen said he was "disappointed" that a review was necessary at the satellite TV company, but pleased with the actions taken to correct the situation.
The Englewood, Colo. company revealed in a Securities and Exchange Commission filing Wednesday night that an internal audit uncovered "significant deficiencies" in its financial controls in past years, but that the shortcomings were been corrected without restatements.
The internal investigation started after an employee submitted a letter of resignation containing some allegations, Ergen said Thursday. The review found that inaccurate documentation was used to determine payments made to a vendor and remedial action was taken against the employee.
"I think it hopefully says a lot about the way we do things here at EchoStar and how seriously we take our financial reporting," he said.
Ergen added that the audit committee made good recommendations which the company is implementing.
EchoStar, the second-largest satellite TV provider after DirecTV Group Inc. ( DTV), on Thursday reported net income of $70 million, or 15 cents a share, for the fourth quarter ended December 31, compared with 1 cent a share in the year ago period. Revenue totaled $1.93 billion, up from $1.51 billion a year ago.
For the year, EchoStar reported net income of $215 million, down from $225 million from the year before. Revenue was $7.15 billion compared with $5.74 billion a year ago.
The company added about 430,000 net new subscribers during the quarter, ending the year wit 10.9 million users. EchoStar said it passed the 11 million subscriber mark in January.
During a conference call Ergen surmised that "it was a good year in some respects and not so good in other respects."
The satellite industry gained a lot of momentum during the year, which was good, he said, but the company's margins still need improvement, he continued. Part of the reason behind the lower margins were rapid growth. It also didn't help that EchoStar had to use two satellite dishes for local channels and an extra large dish in some other cases, he added. Fixing inefficiencies will be a major focus in 2005.
For the fourth quarter, subscriber acquisition cost was about $605 per gross addition. For the year, that number was $593 compared with $480 the previous year. This was partly because of a shift to more leased equipment, which adds to costs because customers tend to lease multiple boxes. This trend may increase costs in the near term but brings in additional fees in the longer term, Ergen pointed out.
Average revenue per user, another important industry metric, rose to $54.86 in 2004 from $51.21 the year before. Churn, or the percentage of customers lost every month, declined to 1.15% during the quarter from 1.53% in the earlier-year period.
EchoStar is still expecting to go through with its buy of Cablevision Systems Corp.'s (CVC) Rainbow 1 satellite, which was used for the cable company's nascent satellite TV service, Voom. Barring regulatory objections, the company expects the sale will go through in three to six months.
NEW YORK (Dow Jones)--Speaking publicly for the first time since reports about improper accounting emerged about EchoStar Communications Corp. (DISH), Chief Executive Charlie Ergen said he was "disappointed" that a review was necessary at the satellite TV company, but pleased with the actions taken to correct the situation.
The Englewood, Colo. company revealed in a Securities and Exchange Commission filing Wednesday night that an internal audit uncovered "significant deficiencies" in its financial controls in past years, but that the shortcomings were been corrected without restatements.
The internal investigation started after an employee submitted a letter of resignation containing some allegations, Ergen said Thursday. The review found that inaccurate documentation was used to determine payments made to a vendor and remedial action was taken against the employee.
"I think it hopefully says a lot about the way we do things here at EchoStar and how seriously we take our financial reporting," he said.
Ergen added that the audit committee made good recommendations which the company is implementing.
EchoStar, the second-largest satellite TV provider after DirecTV Group Inc. ( DTV), on Thursday reported net income of $70 million, or 15 cents a share, for the fourth quarter ended December 31, compared with 1 cent a share in the year ago period. Revenue totaled $1.93 billion, up from $1.51 billion a year ago.
For the year, EchoStar reported net income of $215 million, down from $225 million from the year before. Revenue was $7.15 billion compared with $5.74 billion a year ago.
The company added about 430,000 net new subscribers during the quarter, ending the year wit 10.9 million users. EchoStar said it passed the 11 million subscriber mark in January.
During a conference call Ergen surmised that "it was a good year in some respects and not so good in other respects."
The satellite industry gained a lot of momentum during the year, which was good, he said, but the company's margins still need improvement, he continued. Part of the reason behind the lower margins were rapid growth. It also didn't help that EchoStar had to use two satellite dishes for local channels and an extra large dish in some other cases, he added. Fixing inefficiencies will be a major focus in 2005.
For the fourth quarter, subscriber acquisition cost was about $605 per gross addition. For the year, that number was $593 compared with $480 the previous year. This was partly because of a shift to more leased equipment, which adds to costs because customers tend to lease multiple boxes. This trend may increase costs in the near term but brings in additional fees in the longer term, Ergen pointed out.
Average revenue per user, another important industry metric, rose to $54.86 in 2004 from $51.21 the year before. Churn, or the percentage of customers lost every month, declined to 1.15% during the quarter from 1.53% in the earlier-year period.
EchoStar is still expecting to go through with its buy of Cablevision Systems Corp.'s (CVC) Rainbow 1 satellite, which was used for the cable company's nascent satellite TV service, Voom. Barring regulatory objections, the company expects the sale will go through in three to six months.
