This article has been updated at 5:30 MST, Jan 26th, 2010. Corrections to Total Revenue have been made. .006 cents a share actual earnings now predicted.
By Relmor Demitirius
Sirius XM Radio (Nasdaq:SIRI) is set to announce its 4th quarter earnings in February. A press release from Sirius XM last week has offered a small glimpse at what will be expected when they officially release their 10-Q filing. Before we delve into the Q4 numbers, let us first review what we were already given by the company.
The conference call was announced in the press release to be in February. In Q4 they added 257,000 new subscribers. They added 247,000 self pay subscribers, which means they are permanent paying customers, not counted as a subscriber from any promotional means. This is a nice boost to a company already churning in free cash flow from last quarter. Sirius XM has been touting that since operating income has been achieved, every new dollar over that will see 70 cents to the bottom line. This is an impressive accomplishment for any business model.
The press release also informed us that over 100 million in free cash flow had been achieved for the entire year of 2009, making good on Mel Karmazin’s, CEO of Sirius XM Radio, guidance from the end of 2008. Upon entering the quarter Sirius XM had 35 million in free cash flow (FCF from here on), which means that Q4 will see at least 65 million in FCF. FCF is a metric used by investors to gauge a company’s ability to repay debt, make acquisitions, pay dividends, and buy stock back. Mel Karmazin and Sirius XM realize the importance of this metric, and have been reporting it, and emphasizing its importance to this company. It’s not hard to shuffle a few things around, and report a profit for one quarter based on earnings. It’s another to grow FCF quarter in and quarter out, and show continued ability to grow cash on hand or remove debt obligations. Sirius XM has been doing just this lately. It removed 2 convertible bonds due in December of 2009 with cash, totaling around 90 million dollars, and paid 59 million dollars on other debt as well. This payment went to the 10% Senior PIK Secured Notes due 2011.
Read the rest of this entry »
