DirecTV’s share price is down about 3.4% in initial trading after the company said, in an SEC filing, that an internal investigation found its Sky Brazil had improperly counted subscribers who had cancelled the service. That inflated the Q1 customer count by about 200,000 when it reported that it had 5.26M subs, and added 100,000 to the 5.04M it said it had at the end of 2012. DirecTV says it will write down $25M in Q2 to recognize “increased churn at Sky Brazil.” The filing says that some Sky Brazil employees “directed activities which are inconsistent with…authorized policies” for counting subscribers who, it seems, continued to receive the service after cancelling. The “improper activities have been terminated,” the company says. As a result of this disclosure, and broader financial problems in Latin America, ISI Media’s Vijay Jayant lowered his earnings per share forecast for DirecTV to $5.08 from $5.17 for the year. Wells Fargo Securities’ Marci Ryvicker says that while the company’s stock will take a hit on the news, we probably “won’t know the complete impact on the financials” until DirecTV releases its next quarterly report.
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