Sirius XM beats earnings expectations

Satellite radio operator surprises Wall Street by breaking even on an adjusted basis in the third quarter.

By TheStreet Staff Nov 5, 2009 4:29PM

TheStreet.comBy Robert Holmes,


Sirius XM Radio (SIRI) surprised analysts by breaking even on an adjusted basis in the third quarter, as the company added radio subscribers.


Sirius lost $149.2 million, or 4 cents a share, for the quarter ended Sept. 30, narrowing its year-earlier loss of $4.87 billion, or $1.93. Excluding one-time items, the satellite radio provider broke even on a per-share basis.


Revenue rose 3% from a year ago to $630 million, even as Sirius XM's net subscriber total fell 2% from a year ago to 18.5 million. However, total subscribers increased by 102,295 from the second quarter.


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Analysts expected a loss of two cents a share on revenue of $608.7 million, according to a poll by Thomson Reuters.


Some key metrics for Sirius XM improved from the year ago quarter. Average revenue per subscriber climbed to $10.87 from $10.51, and subscriber acquisition costs fell by 17%. However, the churn rate, which measures the amount of subscribers who left the service, rose to 2% from 1.7% in the year-ago quarter.


Costs decreased across the board, including those related to satellites, content, customer service and marketing.


Sirius XM said it would earn more than $400 million in adjusted income from operations, affirming its previous forecast. The company projected a 20% increase in adjusted income from operations next year, and said it expected to increase its subscribers.


During an interview on CNBC, Sirius XM CEO Mel Karmazin addressed questions about a reverse stock split. The shares have been trading for less than $1 since September 2008, and Sirius XM has until March 15 to meet the Nasdaq's listing standard.


Karmazin said that Sirius XM is "one of the most valuable companies on the Nasdaq today," and that it’s working with the Nasdaq regarding the minimum bid standard.


"We'd like them to change the rules for us," Karmazin said. "We have a very, very substantial market cap."


Karmazin said concerns over the company's debt are "over." During the quarter, Sirius XM sold $257 million of new 9.75% senior notes due 2015 to repay $250 million of 15% term loans that would have matured in 2011 and 2012.


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