Sirius/XM Satellite Radio (NASDAQ: SIRI) released their 2nd quarter earnings (which is their last one as a single entity. The report was better than what the street was expecting by about 15%, but because of the foggy outlook by CEO Mel Karmazin the stock fell $.05 today in trading.
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Late last month I reported that the Sirius/XM merger was approved by the slow and corrupted FCC (in my opinion, I don’t want to be sued for slander). Sirius closed the merger with rival XM Satellite Radio late last month, has reported a loss of $83.9 million, or 6 cents a share, in the first quarter ended June 30. Compared to a year ago, when the company shed $134.1 million, or 9 cents a share. If you exclude the one time items that were related to stock-based compensation, the Sirius unit had a loss of 5 cents a share. The street was expecting a loss of 7 cents a share, according to Thomson Reuters.
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Total revenue rose to $283 million, up 25% from the same quarter a year earlier, slightly above the forecast of $282.7 million.
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During the conference call, Karmazin took time to address the decline in the share price even in the wake of the merger completion.
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“We are well aware that the stock price has suffered. I am not pleased with the market reaction,” he said. “We know we have a great deal of work to do to have shareholders feel the same way as our other stakeholders feel and we take that responsibility very seriously.”
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Karmazin stated that the hard work was behind them, now that the merger has been completed. Sirius/XM can now focus completely on achieving profitability. No timeline as to when the company would see their first profitable quarter.
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Karmazin also said that Sirius XM will offer the first interoperable radios well before the deadline that was put forth by the FCC, which will pass in nine months. Karmazin added that having an interoperable radio at retail would help eliminate consumers’ confusion over which receiver to purchase. However, as automakers decide what gets installed in their vehicles, it could take three years or more until interoperable radios are available in cars(there’s the foggy part).
In its earnings release, Sirius said it ended the quarter with 8.92 million subscribers.
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Combined with XM’s 9.65 million listeners, that gives the new post-merger company 18.5 million subscribers
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On the positive side, subscriber acquisition costs shrank 27% to $78 from $107 last year.
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