rose Thursday as investors applauded strong subscriber growth at the satellite television provider.
The strong user numbers came as the company missed profit targets in its second quarter. But revenue came in ahead of expectations, and the stock was up 2% by the afternoon.
DirecTV added 455,000 net new subscribers, well above analysts' expectations of fewer than 300,000 subscribers.
The growth, which comes as the country's largest cable operators are reporting larger-than-expected subscriber losses for the quarter, will undoubtedly fuel further discussion about the satellite industry's ability to steal market share from cable, and the implications for both industries.
"We've really built momentum," said CEO Chase Carey. The service's recent subscriber additions, he said, aren't "one-quarter flashes."
But Carey warned that he expected cable operators to fight back in the second half of the year, pressuring DirecTV's subscriber growth.
For the quarter ended June 30, DirecTV reported a net loss of $13.3 million, or a penny a share, reversing a year-ago profit of $21.6 million, or 2 cents a share. Analysts surveyed by Thomson First Call had expected a 4-cent profit.
The company also fell short of estimates for operating profit before depreciation and amortization, the cash flow measure also known as EBITDA. DirecTV reported EBITDA of $143 million, less than half the $300 million median of estimates compiled by First Call.
Revenue of $2.64 billion topped the consensus figure of $2.60 billion, however.
The low cash flow, which tumbled more than 40% from the prior-year figure, stemmed mostly from "increased subscriber acquisition costs related to the record gross subscriber additions and higher acquisition costs per subscriber (SAC), as well as higher retention and upgrade costs at DirecTV U.S.," the company said.
DirecTV's U.S. service, which now has 11.6 million owned-and-operated subscribers, added 944,000 gross subscribers in the second quarter. The Wall Street consensus, according to Schwab SoundView, was for 800,000 gross additions.
Acquisition costs for the domestic service amounted to $645 per subscriber, up from the year-ago figure of $595 but even with the first quarter number. The higher SAC is one reflection of the aggressiveness of DirecTV's new management, which was installed after Rupert Murdoch's
took a controlling stake in DirecTV late last year.
Average monthly revenue per subscriber amounted to $65, up from $60.90 one year ago and $63.60 in the first quarter.
Average monthly subscriber churn -- the percentage of subscribers who drop DirecTV each month -- was 1.4%, down from 1.5% a year ago and even with the first-quarter number.
As part of its effort to reclaim subscribers marketed via members and affiliates of the National Rural Telecommunications Cooperative, DirecTV said earlier this week it would buy assets of
, which serves about 1.1 million DirecTV subscribers. Including NRTC customers, DirecTV served 13 million subscribers as of June 30. From July 1 through August 5, says DirecTV, other NRTC members sold their rights to approximately 357,000 subscribers back to DirecTV for a total of $374 million, $174 million of which was paid in cash up front.
DirecTV's shares rose 38 cents Thursday to $16.71.