[wikichart align=right" ticker="NASDAQ:SIRI" showannotations="true" livequote="true" startdate="16-03-2011" enddate="16-09-2011" width="300" height="245]
By Andy Montero
Several days ago on September 14th Sirius XM’s(NASDAQ: SIRI) Mel Karmazin presented at the Bank of America/Merrill Lynch Media, Communications and Entertainment conference. What was remarkable about that presentation was the fact that Karmazin, the CEO of Sirius XM was willing to lay out guidance for 2012 quite early compared to other years. As both a subscriber to the service and an investor I found that willingness to be a very bullish sign with regard to the stock price.
Sirius XM reiterated 2011 guidance on revenue of 3 billion, as well as their previous EBITDA guidance of approximately 715 million, and their free cash flow guidance of 400 million dollars. The company went on to present guidance for 2012 with a 10% increase of revenue to approximately 3.3 billion dollars, an EBITDA increase of 20% to 860 million dollars, and an astounding 75% increase in free cash flow to 700 million dollars. Looking at these numbers, it is very easy to see a bullish future in the short term at least, and more than a stretch to see a bearish case right now, even with a struggling economy.
Sirius XM also provided several insights to the Certified Pre Owned vehicle program they have created thru their automotive partnerships. These programs are gaining traction and the company is very happy with the numbers they are seeing, even while stating that the numbers are not as good as the OEM new car program. Karmazin also informed listeners that programming costs are continuing to go down. Karmazin made sure to state that the 2012 guidance was conservative due to the economic climate as a whole.
It’s amazing that some writers out there continue to lie and use fear tactics in the faint hope they can scare some retailers to sell their shares at current prices. Time and again, patience has proven to be the best course of action. Adding to your Sirius position on drops over time has proven to be the name of the game. The company continues to achieve remarkable synergies; the major ones of which we are starting to see now. Again, going forward there is no satellite building or launch costs for at least the next 4 to 5 years. On top of that the company will require less satellite going forward as it currently operates.
Satellite 2.0 will feature pause and replay as well !@#$ome other customization features such as on demand, and more channels, approximately 30 more. Many of which will target the Hispanic demographic, !@#$irius XM has recognized the importance of the growing Hispanic population and its purchasing power. The channel expansion will include content coming out of Mexico as well as other Latino programming to complement the 3 channels already available on Sirius XM for the Hispanic community. There will be 2 new retail radios coming out in time for the holidays this year that will have 2.0 capabilities. 2.0 capability is expected to be fully integrated into the OEM channel by 2013, but will start appearing in 2012. Sirius XM filed an 8k with details from the media conference and it is available to view on the company website here; http://investor.siriusxm.com/
Disclosure: Long Sirius XM