Hughes' Aggressive Growth Strategy Unaffected by GM Stock Transaction
1 February 2000
Hughes' Aggressive Growth Strategy Unaffected by GM Stock Transaction
Chairman Michael T. Smith Says Company Will Continue Its Focus on Delivery of
Business Objectives
EL SEGUNDO, Calif., Feb. 1 -- The announcement today by
General Motors Corp. that GM will restructure its economic interest in Hughes
Electronics Corporation will have no impact on Hughes' current business plans,
or on its strategy to be the world leader in digital entertainment and
business communication services, according to Hughes Chairman and CEO Michael
T. Smith. The announced actions by GM would, however, provide the flexibility
to use the economic interest that it retains in Hughes in a variety of ways,
including as a currency for additional GM $1-2/3 stock repurchases,
acquisitions, benefit plan contributions, to raise cash proceeds in a
tax-efficient manner, or to implement further corporate restructuring, Smith
noted.
Smith, who on January 13 announced the sale of Hughes' satellite
manufacturing operations and a restructuring of the company into two sectors
focused on its consumer and business customer groups, emphasized that Hughes'
strategy would focus on fueling the growth of its entertainment and business
communication service businesses, and on the successful convergence of
technologies for both the consumer and business markets.
"We are focused entirely on the execution and delivery of our business
plans," said Smith. "We believe we can deliver revenue growth in excess of
20 percent, while accelerating our EBITDA performance." EBITDA (earnings
before interest, taxes, depreciation and amortization) is the key measurement
used by financial analysts to evaluate the performance of entertainment and
communications companies investing heavily in high-growth business activities.
"Also, we are concentrating on the convergence of entertainment, data,
voice, internet, and other communications on a variety of platforms, including
television, desktop computers, mobile telephones, automobiles, airplanes, and
others," said Smith.
"We believe the combination of delivering on our commitments and long-term
investment will support great value for our shareholders," said Smith.
The year 2000 holds many significant milestones for Hughes. Content
enhancements of its DIRECTV(R) service, combined with the continuous addition
of local channels in major television markets, have resulted in greater demand
for DIRECTV, which is expecting a record year in subscriber growth.
Partnerships with Wink and TiVo, which add interactive capabilities to DIRECTV
service, will premiere by mid-year. Also, as part of its previously announced
agreement with America Online (AOL), Hughes and AOL will jointly launch a
digital interactive service, "AOL Plus by DirecPC," this year. Later, as part
of the same agreement, its DIRECTV unit will launch AOL TV, a new content-rich
interactive service on the television platform.
Hughes also plans to launch a total of five new satellites for its
81 percent-owned satellite communication services unit, PanAmSat. It will
increase its production of DIRECTV set top boxes to meet the growing demands
of DIRECTV customers. Its Latin American DIRECTV partnership, Galaxy Latin
America, will focus on maintaining strong double digit growth in the key
consumer markets of Brazil, Argentina and Mexico. And Hughes Network Systems
continues to maintain more than a 50 percent market share in satellite based
business-to-business private network communications, while at the same time
investing in the development and deployment of its two-way, broadband
Spaceway(TM) system in 2003.
Hughes Electronics is a unit of General Motors Corporation. The earnings
of Hughes are used to calculate the earnings per share attributable to the
General Motors Class H common stock
NOTE: Hughes Electronics Corporation believes that certain statements in
this press release may constitute forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995. When used in
this press release, the words "estimate," "plan," "project," "anticipate,"
"expect," "intend," "outlook," "believe," and other similar expressions are
intended to identify forward-looking statements and information. Actual
results of Hughes may differ materially from anticipated results as a result
of certain risks and uncertainties, which include but are not limited to those
associated with: economic conditions; demand for products and services, and
market acceptance; government action; local political or economic developments
in or affecting countries where we have international operations; our ability
to obtain export licenses; competition; our ability to achieve cost
reductions; technological risks; our ability to address the year 2000 issue;
interruptions to production attributable to causes outside our control;
limitations on access to distribution channels; the success and timelines of
satellite launches; the in-orbit performance of satellites; the ability of our
customers to obtain financing; and our ability to access capital to maintain
our financial flexibility. Hughes cautions that these important factors are
not exclusive.
We urge holders of GM $1-2/3 common stock to read the Registration
Statement on Form S-4, including the prospectus, regarding the exchange offer
referred to above, when it becomes available, as well as the other documents
which General Motors has filed or will file with the Securities and Exchange
Commission, because they contain or will contain important information.
Holders of GM $1-2/3 common stock may obtain a free copy of the prospectus,
when it becomes available, and other documents filed by General Motors at the
Commission's web site at http://www.sec.gov, at General Motors' web site at
http://www.gm.com, or from General Motors by directing such request in writing or by
telephone to: General Motors Corporation, 100 Renaissance Center, Detroit,
Michigan 48243-7301, [Attention: GM Investor Relations, Telephone: (212) 418-
6270, Facsimile: (212)418-3658.] This communication shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of securities in any state in which offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of
1933, as amended. Inquiries from the news media should be directed to GM
Corporation Communications: 212-418-6380.