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Shares of SIRIUS Satellite Radio (NASDAQ:SIRI) are trading up roughly 2% a day ahead of earnings, and this is likely due to a somewhat stabile market after last week’s market slide.  The satellite radio provider is expected to post a loss with -$0.10 EPS and $228.3 million in revenues, according to First Call.

Its hopeful XM Satellite Radio (NASDAQ:XMSR) merger partner posted a gain of 338,000 net subscribers in Q2 with its earnings last week, and its cost per new subscriber increased to $121 per new subscriber (up from $112 a year ago).  Unfortunately we all know what happened last week in the stock market, and XM saw shares fall almost 8% on those earnings.  Sirius shares reached over $3.20 again over the last 10 days, but the market slide took its stock back under $3.00.

Unfortunately for the stocks, both of these are in serious limbo until a merger outcome is somewhat known or at least closer to a yes/no verdict.  We already know that Hugh Panero is leaving XM either way on August 10.  We also got to see the proposed new pricing plans on a post merger basis just last week.  And we also know that Sirius is bumping its Chrysler installs from being in 40% of 2007 models to 70% of 2008 models.

Forbes put Sirius’ subscriber adds higher at 295,000 for Sirius this last quarter.  This one really boils down to the merger, and unfortunately that is still no closer to being known with or without an earnings report.  Mel Karmazin has already secured some financing packages that would be needed if this merger can’t close, but unfortunately this one still acts like it wants to be in limbo by analyst reads and by the chart until an outcome is closer or more finite either way.

One of the few metrics that could be a focus outside of the merger is the cash flow from operations.  During Q4 last year the company did post positive cash flow, but its Q1 2007 was again negative $133.9 million in cash flow.  With the new financing secured and the $360+ million in liquidity as of last quarter, we can at least expect to see more projections later in the week of "time to zero cash in various scenarios" from analysts. 

If Karmazin & Co. can turn on his charm and draw attention to the actual results and on its own internal expectations, it might at least be able to keep the focus from Wall Street being only being pointed to the merger.  Unfortunately for both companies, most eyes are also going to be focused on the big board screens to make sure the market isn’t in freefall mode.  The satellite radio provider hosts a conference call at 8:00 AM EST Tuesday.

Jon C. Ogg
July 30, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.