By Relmor Demitrius
Welcome back today for part 2 of the King of all Trades earnings preview in advance of Sirius XM Radio’s (NASDAQ: SIRI) third quarter conference call, which is taking place on the 5th of November. In case you missed Part 1, you can find that article here – Sirius XM Radio Q3 Earnings Preview #1.
As Sirius XM entered into the last half of the year, Mel Karmazin, CEO of Sirius XM radio, had given us a $400 million EBITDA guidance, and Sirius XM has only realized about half of this amount in the first two quarters. Q3 being a traditionally cost heavy quarter (costs increases in Q3 results from charging a large amount of chip related costs, and inventory creation), there are few expecting any EBITDA additions to Mel’s yearly guidance (I think we get some anyway). Q4, a revenue intensive quarter that should allow Sirius XM to post its first ever fully adjusted profits in its history (Free cash flow has already been achieved). Mr. Karmazin has alluded that the company will be FCF (free cash flow) positive for the entire year for 2009. In between this potentially historic earnings report and now is a Q3 that should still show significant improvements in becoming a profitable entity, and allowing Sirius XM to enter 2010 as a potential cash machine for the first time in its long and troubled history. Sirius XM appears to be finally turning the corner after always being underwater with huge start up costs (infrastructure, satellites, licenses, talent acquisitions, paying forward for future subscribers off the backs of current subscribers, etc..). Let’s take a look now at the numbers.
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