Sirius XM Hits Q4 Targets And Says Growing Auto Sales Will Boost 2012

The satellite radio company was back in the black in Q4, due largely to its belt tightening. It generated net income of $71.3M, up from an $81.4M loss in the period last year, on revenues of $783.7M, up 6.5%. The revenue figure was slightly shy of the $785.5M that analysts expected. But earnings, at 1 cent a share, matched the consensus estimate. Sirius XM ended 2011 with 21.9M subscribers, an increase of nearly 543,000 over the three month period. The company says that the pick up was largely due to improving auto sales, the most important driver of satellite radio subscriptions. But it also offered lots of discounted trial subscriptions, which resulted in a 1.6% drop in average revenue per user — and a 10% rise in deactivations. Sirius says it believes it will generate $875M in cash flow (adjusted EBITDA) in 2012, up from its earlier prediction of $860M — and will end the year with 23.2M customers. “We continue to invest in improving the subscriber experience, all with the goal of keeping our subscribers engaged and entertained,” CEO Mel Karmazin says. Nevertheless, he told analysts that the company spent $324M on programming last year — down from $447M in 2008. And in 2012 “we will spend less on programming than we did in 2011.” He also warned that the company’s recent 12% price increase, to $14.49 a month, could increase subscriber churn although “we are not seeing any major problems yet.”

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