DIRECTV Investors Day

DIRECTV hosted its “Investors Day” yesterday and highlighted their outlook for 2008 and beyond. In a word, the company was “conservative” in describing what it sees in the future. The satellite television provider continues to battle not only Dish Network, but also cable and telecom rivals who now offer “triple play” bundles of voice, video, and high speed internet access. At the same time, DIRECTV partners with telco players Qwest, Verizon, and potentially AT&T again to offer the video piece of the pie in many areas.

Highlights of the day included:

Increased penetration of HD and DVR services- Forecast 50% of customers subscribing to one or both by year-end. By 2010, the company sees 70% penetration of High-Def and Digital Video Recorder services.

Increased cash flow-$1 billion higher than 2007, and a whopping $4 billion higher by 2010.

Lower capital spending-$200 million lower in 2008. Satellite expansion will be slowing down thus lower spending.

Possibility of restarting AT&T partnership-While the former Bell South territory acquired by AT&T will start selling Dish Network by April, DIRECTV feels they may still have an alliance in the future with Ma Bell. Dish Network’s deal with AT&T is up for negotiation at the end of 2008.

Lowlights of the day were:

Reduction in projection for total subscribers-Expects 17.5 million by year end, down from prediction of 18 million issued in 2006. DIRECTV has 16.8 million subscribers in the US and 3.28 in Latin America.

Conservative subscriber growth for 3-year period- Company predicts 1.5 to 2 million new subscribers by the end of 2010, even though if they continued the 2007 pace of 900,000 adds, that would be 2.7 million over next three years.

Continued high costs-Overall profit declined during the 4th quarter 2007 due to the high costs associated with hooking up new customers to high-definition and DVR services.