One thing about SIRI -- they sure know how to spin it...
NEW YORK (Reuters) -- Sirius Satellite Radio, which plans to buy rival XM [WRONG!], posted a narrower quarterly loss Tuesday but its subscriber growth forecast fell shy of expectations, pushing its stock lower.
Shares of Sirius (down $0.06 to $3.68, Charts) fell 1.3 percent Satellite radio operators, XM and Sirius will combine in a merger of equals. CNN's Gerri Willis reports (February 19)
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The pay radio operator, whose programming choices range from "shock jock" Howard Stern to Nascar auto racing, said its fourth-quarter net loss was $245.6 million, or 17 cents a share, compared with a loss of $311.4 million, or 23 cents a share, a year earlier.
Satellite radio chiefs defend merger, but ...
Revenue rose 142 percent to $193.4 million, beating analysts' average forecast of $173.1 million as compiled by Reuters Estimates.
The company said it expects to add about 2 million subscribers this year, bringing its total to "more than 8 million."
"The subscriber guidance is on the low end of all of our consensus estimates," said Janco Partners analyst April Horace.
Sirius ended 2006 with 6.0 million subscribers after adding a net 905,247 subscribers in the fourth quarter and a net 2.7 million subscribers during the year.
XM (Charts) ended 2006 with 7.6 million subscribers and has forecast its total will rise to between 9.0 million to 9.2 million in 2007.
"Sirius's 2007 guidance ... seems to acknowledge the slowing of retail demand," Sanford Bernstein & Co. analyst Craig Moffett wrote in a note to clients.
Sirius and XM gain new users either from new car buyers who sample the service and then subscribe, or from shoppers who go to a retail shop and buy a radio.
A slump in retail growth, perhaps due to consumer confusion about which service will survive the merger, may be offset by gains in automotive subscribers whose cars have built-in satellite radios, according to analysts.
On a conference call with analysts, Sirius tried to reassure consumers, saying the company would "guarantee customers that any radio they buy from Sirius will not become obsolete."
Cash flow positive
Sirius Chief Executive Mel Karmazin said in a statement that Sirius achieved positive free cash flow - cash flow excluding amortization and depreciation but including capital expenditures - in the fourth quarter, four years after signing up its first subscriber. [And that they conveniently wouldn't comment on cash flow for next year. Big surprise!]
For 2006, Sirius reported a net loss of $1.1 billion [from just doing business]. On Monday, XM reported a 2006 loss of $718.9 million [which includes $200M in investment impairment & deleveraging expense].
Sirius forecast 2007 revenue approaching $1 billion, compared with an average Wall Street estimate of $994 million.
Sirius estimated its average subscriber cancellation rate, known as churn, would be 2.2 percent to 2.4 percent this year, up from 1.9 percent in 2006. Analysts attributed the expected rise to greater automotive subscriptions.
The company forecast the gross cost to acquire a single subscriber would be about $95 this year, which would be down from $114 in 2006 [Right, if you don't count marketing expenses and payments in company stock!].
A congressional antitrust task force will hold a hearing this week on Sirius' proposed acquisition of XM, which the companies say will help them better compete with other digital audio products, such as iPods and mobile phones, as well as traditional radio.
The combination of the two satellite radio companies must be approved by the Justice Department and Federal Communications Commission, which review mergers for their impact on competition and customer service. |
