We reiterate our long-term Neutral recommendation on
DISH Network Corp.
) backed by the company'smixed financial results for the fourth
quarter of 2012. Although net income fell below the Zacks
Consensus Estimate, revenue topped the same.
Why Keeping at Neutral?
DISH Network is transforming itself from a low-priced leader
in the U.S. pay-TV industry to a premium service provider to
reduce its subscriber churn rate. The company is focused on
increasing distribution of the highly rated DVR and HD equipment,
as value addditions to drive subscriber growth and retention.
We believe management's decision to raise investments in
technically advanced equipment will sustain the company's future
growth. Better pay-TV service, dishNET satellite broadband
service and growing customer loyalty helped the company to
improve its top line.
Nevertheless, following last year's 32.4% stock price growth,
we are apprehensive of restricted market gain in the near term.
Hence, we see the DISH Network shares as currently fairly
Risk/Reward Virtually Balanced
Last October, DISH Network launched a nationwide
satellite-based broadband service called "dishNET" using a
). The company also provides satellite Internet service using the
) in certain parts of the U.S., the West Coast in particular. The
newly deployed nationwide Satellite broadband covers around 2
million people with a starting speed of 5 Mbps.
Although DISH Network received the FCC approval to deploy a
nationwide wireless network, it came with a restrictive
condition. The FCC said that DISH Network may start installing
its nationwide wireless network using a truncated power level
than what the company was initially holding.
A reduction in DISH Network's frequency level is required to
avoid interference with an adjacent frequency that FCC will
auction in 2013.
Sprint Nextel Corp.
) is desperately eyeing this frequency for its proposed expansion
of the LTE network. The FCC proposal will reduce DISH
Network's power and emission levels to establish a profitable
venture in the wireless market.
However, we believe the FCC nod to DISH Network for the use of
its 40 MHz airwaves to deploy a nationwide wireless network with
limited power may become a long-term positive for the
Although this truncated deal may force management to abandon
its decision to build a wireless broadband network, DISH Network
still enjoys the opportunity to collaborate with several
established telecom or tech companies to jointly establish a
wireless network. It may even sell its airwaves for monetary
DISH NETWORK CP (DISH): Free Stock Analysis
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