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:
) 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
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
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
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
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