SIRIUS XM Radio Inc. (NASDAQ: SIRI) must have thought that they needed to get subscriber data out before its earnings report. The satellite radio leader just release a report showing that its net subscriber additions were 445,921 in the September quarter. That put the total period subscribers at 23,365,383 and that is yet another record.
What investors may care more about than what happened then is what it expects ahead. Mel Karmazin said raised the company’s net subscriber guidance up higher to some 1.8 million net new subscribers for 2012. That is some 200,000 higher than its prior 1.6 million net subscribers targeted. Karmazin said, “With almost 1.5 million net subscribers already added in 2012 and continuing growth in auto sales, we will significantly exceed our previous guidance of 1.6 million, marking our third increase in subscriber guidance this year and putting us on track for record post-merger net additions.”
Mel Karmazin also said that this 34% gain over last year’s third quarter was a record third quarter in new additions since SIRIUS and XM Radio merged.
SIRIUS XM Radio shares are up 2.3% at $2.69 on the day and shares hit a new multi-year high of $2.75 today. We would note that BofA recently became very aggressive when it issued a Buy rating and a $3.75 price target on this stock.
What investors need to know about the most here is that Liberty Media Corporation (NASDAQ: LMCA) is reportedly still interested in taking over that 50% control (plus one vote) so that it can do whatever it wants with its convertible notes in SIRIUS XM from its bailout that saved SIRIUS during the recession.
With shares at $2.69 the market cap for SIRIUS XM is now about $10.3 billion. A takeover here may not quite be the takeover that investors have in mind. John Malone of Liberty is known for maximizing tax efficiencies to build wealth. If the 15% capital gains tax is really going to end this year, it would seem very likely that Malone would send all those shares out to Liberty shareholders so that they have the choice of selling these shares. That investment has risen exponentially since Malone came to the rescue for SIRIUS XM.
JON C. OGG