HYPE and fiction

[Blixx]

This whole thing is getting out of hand. I have never seen such a paranoid group in my life. DirectTV is a tiny little company teetering on the edge of bankruptcy, not the big bad monster that everyone is making it out to be. DirecTV does NOT have a large pot of money in their legal fund and it would run out quite quickly if people would stop responding to these idiotic letters by settling with DTV. No, DTV does not have access to Hughes and GM funds. Yes, they are in deep financial trouble. Yes, they will eventually realize it is a losing battle and give up. It is in your best interest to delay things as much as possible. For every lawsuit filed, you are tying up between $5000 and $10000 of DTV's legal fund for the entire duration of the case.

[hajii]

right....

And, where, may I ask, do you get your information from?

besides, ever hear of federal grants to corporations?

[Bohanjian]

Currently GMH has a market cap of 12.3 billion dollars (last trade today 12.35/share. Income sheet from last quarters reporting indicates a liquid (cash) amount of 2.96 billion dollars. But it is in the red as it relates to earnings (minus 4 cents per share), although revenues were solid for the company last quarter. It is losing market share to dish however, and new customers are falling compared to the competition.

They are far from bankruptcy. At there current burn rate, they could last several years without increasing sales one bit and by simply trimming some fat, they could be easily profitable--but hey they are selling out.

So unless you know something they have not mentioned to wall street, like enron type of accounting, you are way off base here.

Here is a portion of there balance sheet:
http://biz.yahoo.com/p/g/gmh.html

[Blixx]

--------------
Bohanjian stated:

Currently GMH has a market cap of 12.3 billion dollars (last trade today 12.35/share....(unrelated facts)....
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GM and Hughes are seperate legal entities. DTV and GM are as much the same company as CBS, Viacom, and MTV. (Viacom owns a majority interest in CBS and MTV) Try again.

[ALittleBirdie]

You're assuming these lawyers aren't doing this on a contingency basis...which in my opinion they almost certainly are. DirecTv isn't paying for this...

[Blixx]

I would NEVER take a case like this on contingency for DTV - it's unwinnable. I would however, consider a percentage over retainer for a case against a dealer or a case where the individual had made admissions or purchased in quantity. I suspect most of these curent cases meet the above criteria.

Has anyone got the letter who has only purchased one device, and did not contact DTV or send e-mail to the vendor asking how to do something illegal?

[slowpok]

That's me...I bought a card reader from white viper. I typed 'iso card reader' at search.com and found white viper.
Used it to write to a white card I got in the back of a book I purchased from amazon.com.
Never did figure out the language.

[dgreen103]

$3500.00 for a few letters is what is paying these lawyers not DTV. All the people that fold and pay the pot are keeping the game going. The lawyers are getting rich and DTV is curbing their piracy rate. Soon it will belong to Murdock and GM will be out of the picture.

[slowpok]

If we could keep the settler from settling than we would all benefit.
DTV has little to go on in most cases and certainly in mine.
I was scared to death and my wife asked what was going on and was worried that we may loose 10000.00 that was stated in the letters.
It's very sad that today, this can happen.
It's time to fly over these guys and take a ---- on their heads.

[Bohanjian]

Funny, my multex and bloomberg investing feeds must be giving me poor information.

Hughes Electronics Corporation, incorporated in 1977, is a provider of digital television entertainment, broadband satellite networks and services and global video and data broadcasting. The Company is a wholly owned subsidiary of General Motors Corporation, which acquired Hughes in 1985. The Company provides communications services on a global basis and has developed a range of entertainment, information and communications services for home and business use, including video, data, voice, multimedia and Internet services. Hughes' businesses include DirecTV, a digital multi-channel entertainment service; Hughes Network Systems (HNS), a provider of broadband satellite networks and services to both consumers and enterprises, and PanAmSat, an owner and operator of commercial satellite fleets.

DirecTV

DirecTV provides customers with access to hundreds of channels of digital video and audio programming that is broadcast directly to customers' homes or businesses via high-power geosynchronous satellites. To subscribe to the DirecTV service, customers purchase or lease the receiving equipment, which, in general, consists of a receiving dish antenna as small as 18 inches, a digital set-top receiver and a remote control.

DirecTV includes businesses in the United States and Latin America, which constitute Hughes' direct-to-home broadcast segment. As of December 31, 2002, DirecTV Holdings LLC had approximately 11.2 million subscribers in the United States and DirecTV Latin America, LLC had approximately 1.6 million subscribers in Latin America. In March 2003, DirecTV Latin America, LLC filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. On December 13, 2002, Hughes announced that DirecTV Broadband, Inc., formerly known as Telocity Delaware, Inc., would close its high-speed Internet service business in 2003 and will shift existing customers to alternative service providers.

Hughes Network Systems

HNS is a supplier of broadband satellite networks, services and products with particular emphasis on providing broadband access. HNS designs, manufactures and installs advanced networking solutions for businesses worldwide using very-small aperture terminals (VSATs). HNS has aligned its services and products into three marketing groups: broadband products and services, set-top box products and carrier services and products.

HNS, which had 158,000 DirecWay broadband consumer customers, as of December 31, 2002, constitutes the network systems segment of Hughes. HNS manufactures DirecTV subscriber equipment, with shipments exceeding 10 million units. It is also developing the SpaceWay service, a next-generation, satellite-based broadband communications platform that is expected to provide customers with high-speed, two-way data communications on a more cost-efficient basis than other systems available. SpaceWay is expected to begin commercial service in North America in 2004.

HNS faces competition primarily from RCA/Thomson Consumer Electronics, Samsung Electronics and Sony Corporation.

PanAmSat

PanAmSat, which is approximately 81% owned by Hughes, owns and operates 21 satellites that are capable of transmitting signals to geographic areas covering 98% of the world's population. PanAmSat provides satellite capacity for the transmission of cable and broadcast television programming from the content source to the cable operator or to the consumer's home. Its satellites serving the United States deliver more than 100 cable television channels and are capable of reaching 10,000 cable head-ends, representing approximately 69 million cable households. PanAmSat's global fleet also serves as transmission platforms for eight direct-to-home services worldwide. In addition, it provides satellite services to telecommunications carriers, corporations and Internet service providers for the provision of satellite-based communications networks, including private business networks employing VSATs and international access to the United States' Internet backbone.

GM an NYSE traded stock is the parent company, but GMH is a separately traded entity that doesn't not co-mingle funds, earnings or revenues with GM. PanAmSat and Dave have about equal revenues. The FTC 10-Q's show that GMH is a separate company that reports financial information separately from General Motors. Therefore the financial data is accurate. The only thing I cannot get without obtaining the annual GMH report is how much HNS and PanAmSat are affecting the balance sheet. But I will check on that.

[Bohanjian]

If they ever did need help from their parent company, GM, they have 27 billion in cash. Nice to have a rich daddy.

[Blixx]

FYI

Hughes DirecTV losses totalled $467 million last year alone. If Murdoch and Fox don't save the company it will go bankrupt by 2005. While Hughes only lost $50.9 million this last quarter ending March 31, it lost $837.7 million in the same quarter last year. They have discontinued broadband and Latin feeds and are as bleeding out their *sses. General Electric Capital won a $133 million lawsuit against Hughes a short while ago. DirecTV Japan has taken a $100 million hit this year. So where's the good news?

[Bohanjian]

That data did not show on my Bloomberg feed but probably was in the annual report 10Q and/or there last quarterly report. They still show 2.3 billion on their balance sheet in liquid assets. So even at 50 billion a quarter at the current revenue stream, 200 million per year, with 2.3 billion that is 11 years at the current burn rate. So their last public filing must not be correct regarding cash on hand. I guess my balance sheet and income statements are wrong-they are not the full sheets though, only the synopsis. But at 800 million a quarter, you are very correct, they wouldn't even last until 2005. So betting person would believe their burn rate would be between those numbers. If the broadband business is so bad, why announce on the 23rd of this month opening up broadband for Brazil--guess they don't make sense at Dave central. Let's look into it a little further and take a quick pulse check on GMH.

PanAmSat, one of the other parts of GMH reported on 5.21.03 that they are kickin' some butt............................................

CEO Joe Wright told Reuters at a Bank of America investors conference in New York on Wednesday the company, which carries telecommunications and video traffic on its satellite network, was on track to meet its full-year earnings estimate of 54 cents to 64 cents a share.

"We are on schedule for the quarter," Wright also added.

PanAmSat raised its 2003 forecast from between 52 cents and 62 cents when it reported its first-quarter numbers at the beginning of last month after it bought the government services business of its 81 percent owner Hughes Electronics

The Annual Report 10K filing is here : http://biz.yahoo.com/e/030311/gmh10-k.html

Some of the cash on hand is in the form of unsecured notes.. that is not good.

4th quarter of 2002 only profitable quarter in last 2 years. http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=gmh

Projections are for profitability in Q 4 of 2004 (per consensus of analysts following the company) http://moneycentral.msn.com/investor/invsub/analyst/earnest.asp?Symbol=GMH

Last public guidance given though indicates a much rosier picture:

April 14, 2003
Hughes Electronics Corporation announced that it expects to report an operating profit of (25) million to 25.5 million on revenues of $2.25 to $2.3 billion in the second quarter and full year 2003 operating profit of $50 to $100 million on revenues of $9.5 to $9.6 billion. Wall Street analysts on average were expecting the Company to post a loss of $0.05 per share on revenues of $2.26 billion in the second quarter and a loss of $0.17 per share on revenues of $9.4 billion in the full year 2003, according to Multex. The Company cited strong performance at DirecTV as the primary reason for its revised guidance.

So they are guiding much higher, if they miss after guiding hire, they will get demolished by wall street, stock price will fall like a stone. So they must have some indicator that things are not as bad as it seems.

Now lets look at how the company compares to its sector--using the current balance sheet. Average net profit margin is minus 1.2% compared to the average communication equipment group of plus 6.1 %. So they are well behind there. Debt to equity ratio is .55 compared to .51 for the average player in that group, so they are slighly behind there. They are 33% slower growing in revenues than the average player in the group and 5 times slower than the industry leader. Of the 10 major analysts following the group their confidence is positive in the company. Some say hold - 3, some say buy - 4, and 3 says strong buy---this could all be altered by the buyout.

Insiders are selling about 2:1, this is not grossly worrisome. If they were going out of business, the insider gassing of the stock would be much higher.

Next look at the current call to put ratio a good indicator on how institutions feel about the stock. In the last 3 months, about 2:1 call to put ratio to the upside for GMH. Most people are betting the stock will climb.

So depends on how you look at the data, the company is not in dire straights (based on this data), it is not on life support (unless it has another close to 1 billion loss in a quarter-but last company guidance did not indicate that), but is probably just about to leave the intensive care unit, most likely heading north not south, and it is certainly a fixer upper for News Corp (they are buying the controlling stake in GMH not just Direct TV) .................

On April 9, Murdoch finally secured perhaps the strongest new media position in the United States, gaining effective control of DirecTV by taking a 34 percent stake in Hughes Electronics (GMH: news, chart, profile). He did so by buying the 19.9 percent stake that General Motors (GM: news, chart, profile) held in the company and a 14.1 percent stake held by the public. DirecTV has 11 million subscribers.

The $6.6 billion deal was for a combination of cash and stock, tying GM inevitably to the future success of Murdoch's News Corporation.

Basically looking at one statement about a company may not tell the whole story. Did I analyze that wrong ? Would I invest, perhaps, but I don't invest in companies until they are profitable and showing earnings and revenue quarter over quarter growth. They have the revenue, now just work on the earnings. Looking at the sale to a better managed company, with increasing revenues, and the sale to News corp will definitely cut costs (jobs, service centers, etc) because of redundancy, they probably will be profitable sooner than expected. Therefore a LEAP might not be a bad call (March 2005 look good) and protect the position with a put (but that is another story)