Mel Karmazin
By Relmor Demitrius
After Sirius XM Radio (NASDAQ:SIRI) released their 2nd quarter financial results in a conference call earlier this morning, Standard and Poors (S&P) Rating agency has revised their equity rating on Sirius XM Radio from HOLD to BUY. S&P also has a $1.50 price target on the equity. This comes off the heels of a solid to excellent quarter from the company. They had record revenue coming in at over $705 million and managed costs once again. Despite huge jumps in auto sales versus last quarter and one year ago, costs still did not outdistance profits. Sirius XM once again posted a profitable quarter, this time despite hefty one time charges related to paying off and refinancing certain debt notes, coming in at around 15 million dollars. That beat
estimates of flat to a minor loss expected with actual results slightly to positive at almost .01 EPS.
Sirius XM also released exciting news about a revolutionary new radio line up called Sirius XM 2.0, expected out in the holiday season of 2011. Mel Karmazin (CEO of Sirius XM Radio) said that the new radios would allow even more options and be far beyond any radio technically that they have released prior. They have apparently been spending some cash on research and development to make their service even better, and importantly, not raising costs. Mel did emphasize these improvements would come with no added costs.
ARPU came in strong at $11.82. SAC held low at $59. This is a small increase from year to year comparison, but remained the same as last Q. Churn was down to 1.8%, from 2% a year ago.
Net operating income was solid at $125 million. EBITDA was $154 million and free cash flow came in at $108 million.
Sirius XM raised revenue guidance for the year from 2.7 billion to 2.8 billion. They see 20 million subscribers by years end and record EBTIDA, FCF, earnings, and revenue.
They also mentioned a willingness to hoard cash to remove debt as well as mentioned how capital expenditures would drop to next to nothing after 2011 until probably after 2017. Satellite spending costs are coming to a close for the next 6 year window. This will dramatically increase free cash flow going forward.
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Disclosure: Long SIRI
Thanks, Relmor,
I have to tell you, looking back at your Estimates for Q2, I honestly dont think you could have been any closer! You should post an article showing your last few estimates and the actual numbers because they are spot on!!!!
Thanks!
I look for this to be the first of several equity upgrades, but with FCF coming in so positive and Mel raising guidance, hopefully, we will get a “credit” upgrade from Moodys and S & P…that is the real catalyst for the PPS and to get institutions buying in a big way…imho Great report and love that Mel increased guidance to 150 MM for FCF…also, he continues to gain more revenue from advertising…nice 25% increase. Nice job on your estimates, Rel. You were pretty close. Keep up the great work!
Just checking in … REL you nailed your Q2 projections about as close to perfect! Credibility is so deserving of you! I also echo Boomer’s comments above.
As I mentioned and was hoping in chat this morning, it is good to see equity upgrades. Longs are on the road to a rewarding ride! Enjoy your day!!!!!
Tuna Fish is out of the tank gasping for air. He had a hold on SIRI with a $1.50 price target. In using math that I learned in this country, that would be a 50% increase from $1. Now, how can you have a hold on a stock that you are estimating to have a possible 50% potential gain? Then this moron, today, places a buy with the same price target of $1.50. Tell me what’s wrong with this picture.
Ironically nothing now. Picture is now accurate. Better question is what WAS wrong with this picture. Mistake, lol…. ya right… corrected.