This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) moved sharply higher this week, closing 7.7% higher to hit $3.36. The general market moved higher, but Sirius XM's gain was better than Nasdaq's 3% pop.

There was more going on beyond the share-price gyrations, though. Sirius XM also posted encouraging quarterly results. CEO Jim Meyer had the "interim" stripped out of his title. Automakers posted strong car sales for April. And Sirius XM also took advantage of low interest rates by issuing $1 billion in senior notes.

Let's take a closer look.

Earn this
Sirius XM posted first-quarter results on Tuesday morning. Revenue climbed 12% to $897.4 million, and comprehensive net income rose 15% to $123.4 million -- or $0.02 a share.

Wall Street was expecting more. Analyst targets called for $0.03 a share in earnings on $906 million in revenue. Still, the stock didn't take a hit on the dual miss. By sticking to its full-year guidance and raising its free cash flow target, Sirius XM is telegraphing a healthy run through the next nine months of the financial year.

Interim CEO no more
In a move that comes as no surprise, interim CEO Jim Meyer was named the media giant's permanent CEO. Unlike former CEO Mel Karmazin, who traded a few verbal jabs with Liberty Media's (NASDAQ: LMCA  ) top brass during last year's power struggle, Meyer has played along with Sirius XM's new majority stakeholder.

He's the right choice. Sirius XM isn't broken, so there's no point in trying to fix it.

Cars are rolling off the showroom floor
April was a strong month for automakers. General Motors (NYSE: GM  ) and Ford (NYSE: F  ) , the country's two largest car manufacturers, checked in with April sales climbing 11% and 18%, respectively.

This is big news for Sirius XM. More than two-thirds of new cars come with factory-installed receivers, and Sirius XM is succeeding 44% of the time in converting free trial users into paying subscribers. The strong auto sales bode well for future self-pay subscriber growth.

Debt to society
Sirius XM is making the most of its improving financial stability to finance at ridiculously low rates. The company priced $500 million in senior notes due in 2020 bearing interest of 4.25% and another $500 million in senior notes due in 2023 at 4.625%. The money is being earmarked for the "general corporate purposes," but $150 million will go to repay all outstanding drawings under its revolving credit facility.

Investors were pleased by the move, sending the stock to a five-year high later in the week.

A Sirius future
Even though Sirius XM has been one of the market's biggest winners since bottoming out three years ago, there's still some healthy upside to be had if things go right for it -- and plenty of room for it to fall if things don't. Read all about Sirius in The Motley Fool's premium report. To get started, just click here now.


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  • Report this Comment On May 04, 2013, at 12:21 PM, Austin77478 wrote:

    I thought the Street was expecting .02 cents. Most analysts believe Sirius met the Street's bottom line expectation, and missed the top line by a whisker.

  • Report this Comment On May 04, 2013, at 2:18 PM, Austin77478 wrote:

    According to AP, "Analysts, on average, were expecting earnings of 2 cents per share on revenue of $905.8 million, according to a surveyl by FactSet."

    So, Rick, get your fact straight before you post.

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