Monday, November 1, 2010

Sirius XM Radio (NASDAQ: SIRI): Q3 Earnings Preview 2010

Sirius XM Radio Inc. (NASDAQ: SIRI) is scheduled to release its third quarter earnings before the opening bell on Thursday, November 4, 2010. Analysts, on average, expect the company to report breakeven per share on revenue of $718.69 million. In the year ago quarter, the company reported breakeven per share on revenue of $629.61 million. 

Sirius XM Radio Inc. provides satellite radio services in the United States and Canada. The company offers a programming lineup of approximately 135 channels of commercial-free music, sports, news, talk, entertainment, traffic, weather, and data services to 19.9 million subscribers in cars, trucks, boats and aircraft, and through a wide range of mobile devices. 

In the preceding second-quarter, the New York-based company's net income was $15.3 million or breakeven per share, compared to a loss of $159.6 million or 4 cents a share in the year-ago period. Revenue climbed to $700 million from $591 million in the same quarter last year. Adjusted revenue increased 16% to $705.6 million. Analysts, on average, expected the company to report breakeven per share on revenue of $689.36 million. 

At its last earnings call in August, the company raised its revenue guidance for the full year 2010. The company now anticipates adjusted revenue to approach $2.8 billion. Previously, the company expected pro forma revenue to be about $2.75 billion. 

Recently, the company announced that it added 334,727 net subscribers in the third quarter of 2010, compared to a net subscriber gain of 102,295 in the third quarter of 2009. In the first three quarters of this year, Sirius XM added 1,089,417 net subscribers compared to a loss of 488,126 net subscribers in the first three quarters of 2009. The company ended the third quarter with a record-high 19,862,175 subscribers, an increase of more than 1.3 million subscribers from September 30, 2009. Self-pay churn improved to 1.9% for the third quarter of 2010 from 2.0% for the third quarter of 2009; andThe conversion rate from a trial subscription included in the sale of a vehicle to a self-pay subscription improved in the third quarter of 2010 to 48.1%, up from 46.2% for the third quarter of 2009. The company expects to end the year with approximately 20.1 million subscribers, implying net additions of approximately 1.3 million in 2010.

Last month, Karmazin expressed optimism that Sirius XM would be able to renew its deal with Howard Stern. The shock jock' five-year deal with Sirius expires at the end of December. Karmazin also indicated that Sirius XM was close to renewing its deal to carry NFL broadcasts. Meanwhile, the recent refinancing of some of its debt has left the company in a much more favorable position going forward with significantly reduced interest on its debt. Sirius XM has also benefit from a rebound in auto sales.

Among other developments, Sirius XM Radio's next broadcasting satellite was successfully put into orbit recently by a Russian Proton-M carrier rocket. Sirius XM Radio plans to launch another satellite, Sirius FM 6, in late 2011.

In terms of stock performance, Sirius XM shares are up nearly 139% since the beginning of the year.

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