Dish Shares Jump on Subscriber Growth

NEW YORK (TheStreet) -- Dish Network(DISH Quote) shares jumped as much as 7% in premarket trading Monday after the company reported surprising quarterly growth in its subscriber numbers.

But at what cost? The company pulled in those new customers mostly through a series of aggressive promotional campaigns, a move that thinned margins and caused Dish to miss both profit and revenue expectations for its third quarter.

Dish, based in Englewood, Colo., admitted as much in its 10-K filing with the Securities and Exchange Commission. Third-quarter results, it said, were "impacted by promotional discounts on programming offered to new subscribers and our initiatives to retain subscribers, all of which negatively impact our subscriber-related margins."

Investors nonetheless shrugged off these facts, sending the company's shares up sharply before the opening bell. The stock closed Friday's regular session at $19.15 and was changing hands recently at $20.40, up 6.5%.

Dish said it added 241,000 net subscribers during the third quarter. Wall Street analysts were, by an large, expecting a minimal gain -- perhaps anywhere from zero to 20,000 new subscribers -- said Steve Clement, an analyst with Pacific Crest Securities, who remains neutral on Dish stock.