Why Sirius XM Shot Higher in 2012

The year is nearing its end, and now's a good opportunity to look at what happened throughout 2012 to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Sirius XM (NASDAQ: SIRI  ) . The satellite-radio company is a pioneer in its industry, but with wireless Internet radio coming on strong, Sirius has ratcheted up its game to compete in its attempt to maintain dominance of the airwaves. Shareholders certainly think the company will succeed, but how has Sirius dealt with its challenges? Read on to find out more about what moved shares of Sirius XM this year.

Stats on Sirius XM

Year-to-date stock return

62.6%

Market cap

$15.1 billion

Revenue, past 12 months

$3.29 billion

Net income, past 12 months

$3.39 billion*

1-year revenue growth

11%

1-year normalized net income growth

18.7%*

CAPS rating (out of 5)

**

Source: S&P Capital IQ.
*Net income includes one-time impact of tax benefits, while normalized net income growth excludes that impact.

How Sirius XM knocked it out of the park in 2012
Sirius got things off to a great start early in the year, as it implemented its first-ever base-rate increase. Given the company's willingness to pay up for key talent like Howard Stern and Oprah Winfrey, subscribers have been happy to fork over more money, as subscriber growth has continued at a strong pace.

Internet-based radio options have posed a potential threat to Sirius for quite a while, with Pandora (NYSE: P  ) and its industry-leading streaming music service drawing competition from Microsoft's (NASDAQ: MSFT  ) Xbox Music service and Google's (NASDAQ: GOOGL  ) Google Play. Even Apple (NASDAQ: AAPL  ) may get into the game in the near future, as it reportedly negotiates with record labels for streaming rights. At least so far, though, Sirius hasn't suffered much from those threats, and it plans its own streaming service to respond to the competitive pressure.

Even with the company's share price run-up, Sirius hasn't been afraid to return money to shareholders. Earlier this month, it announced a $2 billion buyback after having gotten a revolving credit facility to raise $1.25 billion. It will also pay a $0.05-per-share special dividend that will amount to another $325 million in total. With longtime stakeholder Liberty Media poised to take majority control of the company, Sirius has come a long way from its sub-$1 days during the financial crisis.

Sirius has done extremely well by investors in 2012. As the company enters a new chapter in its history, it'll be interesting to see how Sirius keeps coping with competition next year and beyond.

Learn more
Sirius XM has done very well in 2012, but what will 2013 bring? Find out whether Sirius XM is still a buy by reading our premium report on the satellite-radio giant. Inside, you'll learn more about Sirius's upside if things go right, and its risks if they don't. To get started, just click here now.

Click here to add Sirius XM to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 19, 2012, at 12:30 AM, fawazmn wrote:

    You guys keep saying the same thing over and over again about internet radio since last 8 years and SIRI keep adding subscribers year over year. This year SIRI is projected to add 1.8 mil subscribers. You guys should be expert on this....the average investors are getting smarter. Quit writing articles about a company you dont know about.

  • Report this Comment On December 19, 2012, at 4:38 AM, plange01 wrote:

    siri rose by pure speculation.there is little or no chance of this company surviving...

  • Report this Comment On December 19, 2012, at 6:20 AM, fawazmn wrote:

    Siriusxm is gaining subscribers in millions every year and is on track to make billions in profit, and you dont think it will survive???

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