EchoStar is thinking inside the box. The company provides TV set-top boxes (STBs) primarily to former parent DISH Network, as well as similar satellite service providers. Its STB portfolio includes HD and standard definition devices that incorporate digital video recorders. Other products include satellite dishes, remote controls, and cable receivers. EchoStar also owns Sling Media, which sells STBs that enable customers to view their home TV signal on Internet-connected devices. Subsidiary Hughes Communications provides Internet service to consumers in North America and network services and systems to businesses worldwide. The US accounts for most of sales.
The company's EchoStar Technologies segment accounts for just more than half of sales and includes its STB and digital broadcasting operations. The Hughes broadband Internet segment contributes about 40% of sales and EchoStar Satellite Services (satellite capacity leasing, primarily to DISH Network) generates about 15%. The Hughes segment had about 977,000 broadband subscribers.
EchoStar has operations across the US and in Brazil, Germany, India, The Netherlands, the UK, Ireland, and Ukraine. Its largest market is the US, which accounts for about three-fourths of sales.
Sales and Marketing
The primary customer of EchoStar Technologies segment is DISH Network. DISH Network ccounted for 89% of the EchoStar Technologies segment's revenue in 2014. DISH Network accounted for 9%, of total Hughes segment revenue in fiscal 2014. The Company provides satellite capacity on satellite fleet primarily to DISH Network, Dish Mexico, U.S. government service providers, state agencies, internet service providers, broadcast news organizations, programmers and private enterprise customers. In 2014 DISH Network accounted for approximately 84% of total EchoStar Satellite Services segment revenue.
DISH Network is far and away EchoStar's largest customer, accounting for about 57% of sales overall and 84% of the EchoStar Satellite Services segment's sale and 90% of the EchoStar Technologies segment's sales.
EchoStar's revenue increased by 5% to $3.45 billion (a record high) compared to $3.28 billion in 2013. The increase came from a 47% increase in the EchoStar Satellite Services segment revenue on higher service revenue related to satellite services provided to DISH Network. The Hughes segment revenue rose 9% on higher service revenue mainly attributable to an increase in sales of broadband services to our consumer and international customers, an increase service revenue from DISH Network as a result of the increase in wholesale subscribers on dishNET and an increase in other equipment revenue. The increase in revenue was partially offset by a decrease in equipment revenue from DISH Network.
The company’s net income skyrocketed higher than one of its satellites rising more than 5,900% to almost $153 million. The increase was due to the absence of impairment of long lived-assets. Cash flow also rose, reaching $840 million in 2014 from $450 million in 2013.
EchoStar sees the still-growing demand for broadband services as a rich source of growth opportunities. Besides looking for additional customers for its STBs, the company's strategy includes capitalizing on the proliferation of advanced technologies in its boxes that could spark replacement cycles. EchoStar also has dormant satellite and fiber capacity that it hopes will tempt more customers, such as vendors of pay-TV, satellite-based broadband service, corporate communications, and government services. Bundling services and reaching new markets are high on its list of priorities. Customers outside the US are also particularly attractive. EchoStar considers the more modest cable and telecom infrastructures in many global markets to be particularly suited for satellite-delivered services that could be deployed more quickly.
The company has reached agreements to extend its technologies into new uses and geographies. It provide services to telecommunications companies in Brazil and Ireland. In the Middle East, Hughes Networks Systems' technology will monitor conditions at oil wellheads across hundreds of miles in the desert in a pact with a large petroleum company.
Mergers and Acquisitions
EchoStar was acquisition free in 2014. In late 2013 it acquired Solaris Mobile, a company based in Ireland and licensed by the European Union, to provide mobile satellite services and complementary ground component services covering the entire European Union. The deal allowed EchoStar to commercialize the license through its satellite and terrestrial technology capabilities and fortified its reach in Europe.