SIRIUS XM Radio
) posted robust financial results for the second quarter of 2012
with record high revenue, EBITDA, free cash flow, and net
subscriber addition. The strong performance was mainly due to
impressive management execution on the back of rising auto industry
sales. As per management, the growth momentum of the company will
further expand in the rest of 2012 and has raised its financial
outlook for the second half of 2012.
Despite price rise of its services, SIRIUS XM maintains its
churn rate. Solid conversion rate and an effective marketing
strategy helped the company to achieve this milestone. At present,
approximately two-thirds of all cars sold in the U.S. come with
in-build SIRIUS XM satellite radio service. Apart from its healthy
subscription-based business, the company is slowly growing its
advertising business. We, thus, reiterate our Outperform
recommendation on SIRIUS XM.
In January 2012, SIRIUS XM raised the prices of its services.
Despite this, average self-pay monthly churn rate in the second
quarter was 1.9%, remaining same year over year. Customer
Conversion rate was 45%, remaining same year over year. Management
is hopeful that its churn rate will remain more or less same as the
Meanwhile, SIRIUS XM is currently fighting a hostile takeover
Liberty Media Corp.
), its most powerful creditor. Liberty Media has filed a new
application to the U.S. Federal Communications Commission, in which
the company stated its intention to acquire more than 50% of SIRIUS
XM, so that it can take full control of the Board of SIRIUS XM.
Liberty Media withdrew its previous application with FCC to de
facto control SIRIUS XM. Instead, the company is now willing to get
a full control. Liberty Media at present has 49.6% stake in SIRIUS
XM's total outstanding shares.
LIBERTY MDA-LC (LMCA): Free Stock Analysis
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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