Sirius Drowns Out Deal Noise
Merger buzz and a strong subscriber-growth forecast helped keep investors from focusing too keenly on Sirius' (SIRI) widening losses.
But the big earnings miss did help knock the New York satellite radio shop's stock down 17 cents, or 3%, to $6.07 in midday trading Wednesday.
Looking ahead, Sirius said losses would increase from 2004 levels and revenue for the year would fall below expectations. Sirius says its adjusted net loss will grow to $480 million at the end of 2005 from $456 million last year. And despite raising its 2005 subscriber target to 2.5 million from 2.3 million previously, Sirius cut revenue projections to $210 million, below the $213 million analysts expected.Sirius has become one of the most actively traded stocks on the Nasdaq as investors debate the merits of the company's potentially massive consumer appeal with the risks of steep losses and the constant need for more cash. On the merger front, Sirius CEO Mel Karmazin was asked on a conference call about a report Wednesday in the New York Post of a possible tie-up between Sirius and rival XM (XMSR). Karmazin said it was the third such rumor he'd heard in his eight weeks on the job. Though Karmazin didn't formally deny the report, he made it clear he wasn't personally involved in any high-level discussions. Never mentioning XM by name, Karmazin said: "I have not met with the chairman and I have not met with the CEO, so I have no idea where any of this came from." Observers say a merger of the only two satellite radio players could help cut operating costs by eliminating competitive bidding on programming contracts. But from a technology, regulatory or even a valuation perspective, industry watchers say the pairing seems unlikely.
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