This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Satellite Radio -- You Can't Be Sirius?

NEW YORK ( TheStreet) -- Sirius XM Radio (SIRI - Get Report) finally posted a profit.

Sort of. Its third-quarter net loss was $149 million, or 4 cents a share. Adjusting for non-recurring items, the New York-based satellite-radio broadcaster's loss was $11 million, which amounts to break-even on a per-share basis. Analysts expected a loss of 2 cents a share.

Pro-forma operating profit was $106 million, compared with a loss of $37 million a year earlier. Revenue growth beat analysts' expectations. A total of 102,000 subscribers were added by the end of September. The shares rose in after-market trading. Sirius, which acquired rival XM Satellite Radio in July 2008, appears to be righting its ship.

Still, investors should steer clear of Sirius' stock as the company has a long way to go before it can post sustainable earnings.

Sirius' stock has fallen nearly hand in hand with retained earnings over the past three years. The company is in the hole for more than $10 billion and living off debt. The stock drop -- 84% during the past three years -- is the direct result of past performance. While that trend may (or may not) be turning around, the ravages to the company's financial statements won't be undone quickly.

Sirius took steps to hold its own financially by refinancing at lower interest rates and pushing its earliest refinancing need to 2011. But the debt load is overwhelming, and the threat of a massively dilutive Liberty Media equity conversion should make stock holders quake.

Beyond burdensome financial matters, Sirius has challenges to its business model that make the future unclear.

One of the most important drivers for Sirius is auto sales. Most new satellite-radio subscribers are car buyers who get a free year. That most likely benefited Sirius during the third quarter due to the so-called cash-for-clunkers program, which spurred car sales. No mention of the program's effect was made in Sirius' earnings release but Ford (F - Get Report), Honda (HMC - Get Report), Toyota (TM - Get Report) and almost all other major car manufacturers provide a Sirius or XM subscription option, so the program is sure to have boosted subscribership.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
F $13.56 0.00%
HMC $26.96 0.00%
SIRI $3.95 0.00%
TM $101.70 0.00%
AAPL $93.74 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs