NEW YORK ( TheStreet) -- Sirius XM Radio ( SIRI) 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), Honda ( HMC), Toyota ( TM) and almost all other major car manufacturers provide a Sirius or XM subscription option, so the program is sure to have boosted subscribership.

The future of satellite radio's format is questionable. As mobile media devices become more prolific and users program their dream station for free, the worth of the Sirius service dwindles. Adding to that pressure, the recent explosion of podcasts threatens the talk component of Sirius' service.

Podcasts like "The Adam Carolla Show" have proven to be wildly popular. Carolla's show is a daily, hour-long program that more than satiates fans who commute to work. Podcasts are available in all genres and are usually free, making the need to take the monthly hit from Sirius even more questionable.

For sports fans who listen to games from around the country, how often do they listen to them in the car versus watch them on TV? For those watching TV, why not spring for a season pass, available through most cable and dish companies, so the games can be seen, not just heard?

Other parts of the Sirius value proposition also evaporate upon closer inspection. Howard Stern, the king of all media, apparently, is a huge draw, but his contract will expire in a little over a year, and he hasn't said if he'll stay. Should he defect for the podcast world or simply retire with the millions he earned in his first deal, Sirius would see subscribership drop dramatically.

Sirius has become somewhat notorious lately as a vocal minority of conspiracy-theorist shareholders have been quick to label any negative media coverage of the struggling company as market manipulation. They've called on the Securities and Exchange Commission to take action. Many proponents make confusing claims, such as: Bankruptcy is off the table because debt has been refinanced until 2011. Of course, missing an interest payment in the interim could sink Sirius. The prospect of a conspiracy against a stock that has no trouble losing money all by itself is, of course, laughable.

Sirius' quarterly results were, indeed, surprisingly good, but the problems are too numerous for this one not-so-bad quarter to shine as a beacon of hope. From heavy debt to an outdated business model, the company is still in serious trouble. When a loss of $11 million is applauded as a "great quarter," you know a company is in bad shape.

-- Reported by David MacDougall in Boston.

Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.

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