What Sirius' Earnings Really Tell Us

NEW YORK (TheStreet) -- In the most recent installment of my of annual Worst-Run Companies list, I added Sirius XM Satellite Radio(SIRI Quote) to my existing lineup of the most poorly managed companies.

Sirius' CFO, David Frear, contacted me and requested the chance to give me the company's point of view. We had a friendly discussion in which he outlined the company's strengths and strategies for the future. No nonpublic information was disclosed or discussed. I promised Frear that I would have an open mind and objectively evaluate the company's quarterly report, which was released last week. This article will do just that.

Sirius was expected to lose 2 cents per share on revenue of $608.7 million in its third quarter, which ended on Sept. 30. To the company's credit, it reported better-than-expected results, but it still generated a slight net loss, which when rounded amounted to less than 1 cent per share on an adjusted basis, excluding the loss on the extinguishment of debt. On a GAAP basis, Sirius lost $149.2 million, or 4 cents per share. On an adjusted basis, excluding interest, amortization and depreciation, Sirius earned $106.14 million.

Reported revenue of $629.6 million increased 2.75% year over year. Subscriber revenue, which represents 93.3% of total revenue, rose 2.64% year over year. Net advertising revenue declined 30.5% year over year. Equipment revenue declined 18.3% year over year. The impact -- positive or negative -- of this summer's Cash for Clunkers program cannot be accurately determined for at least another quarter.