Hughes, Boeing reach settlement on satellite sale dispute
Posted: Thu, Jul 17, 2003, 10:44 AM ET (1444 GMT)
Hughes Electronics and Boeing reached an agreement late Tuesday on a long-running dispute over Boeing's purchase of Hughes' satellite manufacturing unit three years ago. Boeing, who paid $3.75 billion for Hughes Space and Communications in October 2000, had argued that Hughes had overvalued the unit, a claim that Hughes disputed. Under the agreement, Hughes will pay Boeing $360 million in cash — a fraction of what Boeing had originally requested — to settle the dispute. In addition, Boeing will not have to pay Hughes $4.4 million as part of a settlement the two companies reached with the US State Department earlier this year about export control violations. Boeing will also delay the launch date of the first satellite in Hughes' Spaceway broadband satellite system from late 2003 to February 2004. Despite the settlement, Hughes still reported strong financial data Wednesday for its fiscal second quarter, with an 8.1% increase in revenue over the same quarter of 2002 and an operating profit of $140 million, thanks to strong performance by its DirecTV satellite television unit.
Hughes Electronics and Boeing reached an agreement late Tuesday on a long-running dispute over Boeing's purchase of Hughes' satellite manufacturing unit three years ago. Boeing, who paid $3.75 billion for Hughes Space and Communications in October 2000, had argued that Hughes had overvalued the unit, a claim that Hughes disputed. Under the agreement, Hughes will pay Boeing $360 million in cash — a fraction of what Boeing had originally requested — to settle the dispute. In addition, Boeing will not have to pay Hughes $4.4 million as part of a settlement the two companies reached with the US State Department earlier this year about export control violations. Boeing will also delay the launch date of the first satellite in Hughes' Spaceway broadband satellite system from late 2003 to February 2004. Despite the settlement, Hughes still reported strong financial data Wednesday for its fiscal second quarter, with an 8.1% increase in revenue over the same quarter of 2002 and an operating profit of $140 million, thanks to strong performance by its DirecTV satellite television unit.
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