EchoStar Communications [Nasdaq: DISH] is continuing to rack up impressive financial results.

The company unveiled its first quarter results last week, reporting rising subscribership, earnings and free cash flow. Wall Street analysts who track the company expressed admiration of the performance in the face of stiffening competition from cable TV operators and a weak economy.

The DISH Network added approximately 350,000 net new subscribers in the first quarter, to boost its overall total to 8.53 million. That “very powerful” subscriber growth topped the estimated 250,000 net new subscriber gains forecasted by Marc Nabi, a Merrill Lynch satellite analyst, according to a research note he sent to his clients last week.

Reasons for the robust gains include higher than expected total subscriber growth and reduced churn, he explained.

Total subscriber additions by EchoStar hit 691,000 in the first quarter, topping Nabi’s estimate of 649,000. The DISH Network’s churn rate of 1.36 percent a month was below the 1.6 percent estimated by Merrill Lynch and the 1.37 percent subscriber churn rate reported by the company for the first quarter of 2002.

EchoStar’s revenue jumped 23 percent, to $1.36 billion for the first quarter, compared to $1.10 billion for the corresponding period in 2002.

Other key financial metrics were strong as well. For example, EchoStar’s EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $277 million, a rise of $100 million compared to the $177 million notched in the corresponding period in 2002.

Free cash flow from operations totaled $125 million for the first quarter, climbing $36 million compared to $89 million for the same period in 2002.

EchoStar’s net income totaled $58 million for the quarter, compared to a net loss of $35 million during the same period in 2002. Likewise, earnings per share rose 12 cents a share during the quarter, compared to a loss per share of 20 cents for the corresponding period of 2002. Loss per share for first quarter 2002 included the effects of certain non- cash accounting charges related to the Vivendi Universal equity investment.

Overall, EchoStar’s first quarter results highlight its continued strong subscriber growth versus cable and rival satellite TV services provider DirecTV, as well as improving profitability, according to a report last week by Karim Zia, a satellite and cable analyst with Deutsche Bank.

EchoStar’s positive results last week spurred Zia to boost his full-year outlook for the company. He now expects net subscriber additions for the year to hit 1.2 million rather than his earlier forecast of 1.12 million. In addition, EBITDA should reach $1.13 billion by year-end, instead of his previously forecast $1.08 billion, while earnings per share should climb to 65 cents a share from his previous estimate of 50 cents, he added.

That should also lift free cash flow levels to $1.04 a share from Zia’s earlier estimate of 91 cents a share. In addition, Deutsche Bank increased its free cash flow estimate for 2004 to $1.92 a share, up from $1.71 a share.

–Paul Dykewicz

(Marc Nabi, Merrill Lynch, 212/449-2468; Karim Zia, Deutsche Bank, 212/469-7591)