Sirius Satellite Radio
upped year-end targets and set plans to refinance some debt.
The New York-based satellite radio shop posted a steep second-quarter loss but beat Wall Street's top- and bottom-line targets. Churn, or monthly customer defections, was low at 1.4% but ticked up from the first quarter's 1.3%.
For its second quarter ended June 30, Sirius lost $178 million, or 13 cents a share, compared with the year-ago loss of $137 million, or 11 cents a share. Revenue nearly quadrupled, surging to $52.2 million from $13.2 million a year ago. Wall Street had been looking for a 15-cent-a-share loss on revenue of roughly $50 million.
Sirius said it added a net 365,000 subscribers during the quarter, bringing its subscriber rolls to 1.81 million. The company said it now expects to have 3 million subscribers at year-end, up from the previous 2.7 million and 2.5 million forecasts. Sirius and rival
XM Satellite Radio
continue to expand their user bases rapidly, though both companies continue to plow through cash at a startling rate.
"Our great second quarter results clearly indicate that momentum for Sirius is accelerating," said CEO Mel Karmazin. "We beat Wall Street consensus expectations on all important metrics through a continuing focus on sound business execution, while maintaining low churn and very high levels of customer satisfaction. Plus, our automotive channel showed very strong results and consumers responded favorably to our second quarter retail promotion. Going into the second half of the year, we believe that creative new programming, additional automotive factory programs and the introduction of exciting new products will continue to drive our strong growth for the future."
Sirius said the amount it pays to grab a new user fell to $160 in the second quarter from $234 a year ago. But average revenue per user fell slightly as well, dropping to $10.50 from $10.65 a year earlier.
Last week, XM took a big leap into the music download business by signing on with consumer electronics giant Samsung for a new generation of radios that combine satellite reception with MP3 file players. XM further aligned with the mobile music library trend made popular by
iPod, by signing an exclusive deal to have
as its exclusive music subscription service.
Some industry observers speculated that a similar device and music download service deal could be in the works between satellite rival Sirius and Apple.
Sirius also said Tuesday that it would place $400 million of eight-year senior notes to refinance some higher-rate debt coming due sooner. Sirius plans to redeem all of its outstanding 15% Senior Secured Discount Notes due 2007 and 14 1/2% Senior Secured Notes due 2009. The balance of the net proceeds will be used for general corporate purposes.
Early Tuesday, shares of Sirius were flat at $6.95.