* EPS loss of 2 cents, vs nil per share a year earlier
* Revenue outlook falls short of expectations-analyst
* Free cash flow outlook is light-analyst
* Executives dismiss Pandora, free Internet radio
* Shares fall 5.5 percent
(Adds analyst, executive comments, updates share prices, adds
By Liana B. Baker
NEW YORK, Feb 15 Sirius XM Radio Inc (SIRI.O),
home to programs by Howard Stern and NFL football, reported a
net loss for the fourth quarter and forecast
weaker-than-expected revenue for next year, sending its shares
down 5.5 percent.
The satellite radio company expects full-year revenue to be
about $3 billion, which falls short of Wall Street's
expectations of full-year revenue of $3.02 billion to $3.1
For 2011, the company projected free cash flow to be $300
million, which fell short of Wunderlich Securities analyst
Matthew Harrigan's estimate of $430 million.
"Their free cash flow figure is light," Harrigan said. Free
cash flow refers to profit that excludes depreciation and
amortization, but includes capital expenditures.
Excluding costs for paying off debt early and restructuring
charges, the company said net income would have been $62
million, up from $18 million a year earlier. The company did
not provide a per-share amount following these adjustments.
Sirius XM has been steadily adding subscribers and
distancing itself from years of huge losses and concerns about
its business model. It ended the quarter with 20.2 million
subscribers, up from 18.8 million a year earlier. It expects to
sign on another 1.4 million subscribers next year.
"We are no longer a long shot concept and company," Chief
Executive Mel Karmazin told analysts on a conference call.
Sirius XM said it paid less to attract subscribers than it
did last year. Programming costs will continue to fall, it
said, even as it continues to sign high profile programming
In December, Sirius XM struck a new contract with Howard
Stern that will have the shock jock on air at least until 2015.
Stern's previous contract was a five-year $500 million contract
but terms of the new contract were undisclosed. [ID:nN09241182]
While Sirius XM has vastly improved its finances in recent
quarters, some analysts worry it faces a competetive threat
from Pandora, the Internet radio company.
Last week, Pandora filed to raise up to $100 in an initial
public offering and analysts have said it could steal market
share away from Sirius XM, especially as new devices and
smartphones allow Pandora to be used in cars.
(Click here to read a Breakingviews column on Pandora and
Sirius XM [ID:nN05209055])
Much of Sirius XM's subscriber growth comes from buyers of
new cars that have the radios installed. Nearly half of the
customers who receive trial subscriptions when they buy a new
car become full-paying subscribers after their promotions end.
When asked about Pandora on the conference call, Sirius XM
executives were quick to point out critical flaws in the
strategy of free online radio.
"Nothing is really free because the way they make their
money. They make you listen to commercials," Karmazin said,
referring to Pandora and other free online radio services.
Sirius XM reported a net loss of $81.4 million, or 2 cents
per share, versus a profit of $11.8 million, or nil per share a
Revenue rose $735.9 million, which falls shy of the $739.9
million that analysts were expecting, according to
Shares were down 10 cents at $1.73 in midday Nasdaq
(Reporting by Liana B. Baker, editing by Maureen Bavdek and