Bear Stearns Drops Rating on EchoStar
Bear Stearns 'Down' on EchoStar
The Wall Street firm says DIRECTV's future may be brighter.
By Phillip Swann
Washington, D.C. (July 7, 2006) -- Bear Stearns, a leading Wall Street brokerage firm, yesterday lowered its rating on satcaster EchoStar to 'underperform."
To make matters worse for EchoStar, the firm said its satellite rival DIRECTV looks more "attractively valued" in the near future.
Based on the report, shares of EchoStar dropped more than two percent on Thursday.
Bear Stearns analyst Spencer Wang said that EchoStar is spending more money than commonly believed, pointing to the satcaster's satellite lease agreements with SES Americom.
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Like DIRECTV, EchoStar is preparing to launch new satellites so it can provide more services, such as High-Definition TV channels.
"Combined with our cautious view of the (satellite TV industry) in general and our view that EchoStar is not an acquisition candidate in the near term, we think a more cautious recommendation is warranted," said Wang.
Swanni Sez:
Many so-called experts have lost face -- and considerable money -- over the years betting against EchoStar and its maverick CEO, Charlie Ergen. However, it shouldn't be discounted that EchoStar will have to spend wildly -- if not beyond its means -- to keep pace with DIRECTV and the cable TV operators. And that could take a toll on the company's finances and flexibility in the next few years.
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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.
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1 Comments:
According to the report EchoStar is spending money to lease satellites so that they can deliver more HD content to consumers. If consumers really are in demand of HD, then EchoStar is probably making a good investment. My cable systems can't offer the volume of HD that EchoStar can offer, so EchoStar will have my business as long as they remain the leader in HD. I wouldn't critize, I would applaud.
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