Sirius XM Sees Profits Rise


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Anybody who has bought a new car of late with satellite radio capabilities will not be in the least bit surprised to learn that Sirius XM (NASDAQ: SIRI ) has just had a successful quarter. If nothing else, these guys know how to get on the backs of potential customers.

If you buy a car that has a satellite radio (and most do nowadays), you will usually receive a free Sirius XM trial that will give you a couple of months usage. After that, you will have the option of paying a monthly subscription fee, or no longer getting satellite radio.

If you choose the latter, deciding that regular radio and / or CDs will do you just fine, you will receive a letter from Sirius at least once a month offering you a new deal. SIRI simply does not give up.

So the fact that its first-quarter net income was reported as $107.77 million or $0.02 per share, up from $78.12 million or $0.01 per share from last year, will surprise none of the people who have been on the receiving end of the unrelenting marketing campaign.

Total revenues for the first quarter went up to $804.72 million from $723.84 million in the year before. A poll of analysts came up with an estimate of $803.83 million for the first quarter.

The subscriber base is now at an all-time high of 22.3 million subscribers, reflecting the ferocity of the sales technique, but also the quality of the service. Satellite radio is commercial-free, and there is an incredible choice of stations covering the many of the most niche of sub-genres.

SIRI expects to increase new subscribers by 1.5 million this year, and it expects revenue of roughly $3.3 billion, adjusted EBITDA of approximately $875 million, and free cash flow of roughly $700 million.

SIRI's earnings come the day after news emerged that former employee and shock jock Howard Stern would be appealing against a judge's decision to dismiss the lawsuit Stern had filed against SIRI.

Stern claims that, following the termination of his contract with Sirius XM, the company owes him stock bonuses and additional fees. He insists that he deserved increased compensation for his role in the Sirius and XM merger in 2007. His lawyers claim that the judge misinterpreted the contract.

Stern's legal filing states that, "Reversal is warranted because, among other things, the parties' contract is clear on its face that plaintiffs are entitled to the relief they seek or is, at a minimum, ambiguous."

Whatever happens, the results are unlikely to damp SIRI's mood right now.

Follow me @BCallwood .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Earnings
Referenced Stocks: SIRI

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