This Week in Sirius XM Radio

Satellite radio is always on the move with Sirius XM.

Jul 19, 2014 at 12:30PM

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ:SIRI) moved higher on the week, climbing 1.8% to close at $3.44. The move was a lot better than the Nasdaq's 0.4% gain. 

There was more going on beyond the share-price gyrations, though. Sirius XM beefed up its buyback efforts. On the streaming front, Spotify announced that it has no intentions of following Pandora (NYSE:P) into becoming a public company anytime soon. 

Let's take a closer look.

Buy curious
Sirius XM has printed billions of shares over the years to facilitate a major acquisition and sidestep bankruptcy, but it has been working hard over the past two years to reverse part of those actions. This week it took another step to eat away at its gargantuan share count, with its board authoring the repurchase of another $2 billion worth of stock. This is the third time in the past 19 months that Sirius XM has authorized $2 billion in buybacks.

Sirius XM is good for the money. It expects to generate nearly $1.1 billion in free cash flow this year, and its improving fundamentals make it easier to line up financing on the cheap. 

It's not going to dive into the latest $2 billion buyback overnight. In fact, at the end of March it was only $2.3 billion into the $4 billion in repurchases that the board had authorized several months earlier. However, it has proven that these board moves aren't mere lip service, and that will be good news down the line when Sirius XM's expanding profitability improves on a per-share basis because the fully diluted share count is shrinking. 

Spotify doesn't want to you to be its master
Pandora has learned the hard way that it's not always easy being a public company. In fact, it recently stopped providing the monthly performance metrics that it used to dish out. Pandora will now stick to the required quarterly reports to offer insights about its operations. 

Spotify is in no hurry to follow Pandora into becoming a publicly traded company. 

"The primary thing for us is just growing the business," Spotify CEO Daniel Elk said at Fortune magazine's Brainstorm conference this week, zapping the chatter about the streaming music darling going public. "I personally don't understand the quarterly capitalism of Wall Street."

If Elk isn't fond of Mr. Market's game of making sure that companies keep producing every three months, it's unlikely that Spotify will be public anytime soon. Then again, with 40 million users worldwide and a quarter of them on board as paying customers it wouldn't be a surprise if a tech giant acquires Spotify before it ever goes through with its IPO.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Pandora Media and owns shares of Pandora Media and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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