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Underlying demand for the small dish remains solid, according to one Wall Street analyst who suggested in a research note that the DBS business may have netted more than half a million customers during the second quarter.

Armand Musey of Salomon Smith Barney estimated that net adds for small dish services could be around 525,000 for the three-month period that ended this past weekend. Musey said that EchoStar's DISH Network may have gained about 275,000, while DirecTV is expected to net about 250,000, including 1,000 Pegasus subscribers.

In a note detailing second quarter thoughts, however, Musey said he believes DBS providers are facing increased pricing pressure due to the maturation of the multichannel business. As a result, he lowered his long-term ARPU growth rate to 3 percent from 5 percent for the business and trimmed 2003 EBITDA/EPS estimates for all three companies.

Musey also cut the price target for EchoStar to $25 from $30, Hughes to $13 from $17 (actually from $15, as $2 of the reduction comes from lowering the valuation for HNS), and on Pegasus to $1 from $3.

From SkyReport (Used with Permission)
 
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