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Stock Analyst Update

Slower Growth at Hughes Electronics Is a Concern

Slower growth rates and increasing costs raise red flags.

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What Happened?
Hughes Electronics (GMH) announced Wednesday that third-quarter revenue increased by a tepid 3.7% despite the addition of a record 450,000 net subscribers. Acquisition costs increased from $520 to $525 per subscriber, consistent with Hughes' previous guidance.

What It Means for Investors
We think that Hughes Electronics' slowing revenue growth and and rising subscriber acquisition costs are cause for concern. The stock is still up about 33% over the past year, thanks largely to acquisition rumors. Parent company General Motors (GM) announced that it intends to divest itself of Hughes Electronics, and is presently reviewing proposals.

Richard Wilson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.