By Liana B. Baker
Feb 5 Sirius XM Radio Inc posted higher
quarterly profit and revenue on Tuesday and its interim chief
executive told Wall Street not to expect big changes at the
satellite radio provider under his leadership.
In January, Liberty Media Corp became its majority
owner after regulators gave it the green light to take control
of the satellite radio operator, ending a prolonged battle for
control that led to the departure of the previous CEO late last
year. Liberty has installed several new board members.
Jim Meyer, who was named interim CEO in December, addressed
the recent changes at Sirius but said the company's goals will
stay the same.
"The first question I usually get from investors is what
should we expect from you and what's going to change at Sirius
XM under your leadership? I can tell you that you will see a lot
more of the same, with a focus on self-paid subscriber growth,
and a very tight focus on costs," Meyer said.
Even as shares dipping 1 percent to $3.13, analysts said
Meyer has done a good job in his debut.
"No one is (former CEO) Mel (Karmazin) but what really came
across well is that he obviously understands the car business,"
said Maxim Group analyst John Tinker.
Karmazin helped rescue Sirius from the brink of bankruptcy
and was also well known for his stints at CBS Corp and
Meyer, who arrived at Sirius in 2004, the same year as
Karmazin, oversaw the relationships with the auto industry,
which accounts for the bulk of revenue. Meyer expects the number
of satellite-enabled vehicles to double in the next five years.
He said Sirius had made a foray into telematics, or
automotive information services such as stolen vehicle tracking
and roadside assistance. It signed a deal with Nissan Motor Co
Ltd in the fall to provide the services. Meyer said
Sirius plans to pursue similar agreements in the future.
For now, Maxim's Tinker said Meyer's prospects are looking
good to become Sirius XM's permanent CEO. A special committee
headed by Liberty CEO Greg Maffei may provide an update on its
search for a permanent chief on Feb. 27, when it reports
Maffei has said the committee is considering Meyer for the
top job as well as other candidates.
Lazard Capital Markets analyst Barton Crockett said Meyer
"has to be the leading candidate to be the fulltime CEO."
Crockett said customer service and billing costs rose more
than expected to $82.3 million in the quarter, which analysts
said could explain why shares were trading lower.
The company added 529,000 net subscribers in the quarter, up
from 374,000 a year ago. Its churn, or cancellation, rate
improved to 1.8 percent from 2 percent in the third quarter. Its
conversion rate, or the percent of promotional subscribers who
become paying customers, was unchanged from a year ago at 44
Net income rose to $156.2 million, or 2 cents per share, in
the quarter, from $71.3 million, or 1 cent, a year earlier. This
matched analysts' estimates on average.
The New York-based company said total revenue rose 14
percent to $892.4 million. Analysts expected $898.65 million,
according to Thomson Reuters I/B/E/S.
Sirius said it started a $2 billion share buyback program.
In December, its board approved the long-awaited repurchase
program and issued a special dividend, giving a big payout to
its biggest shareholder, Liberty.
Sirius previously said it had added 2 million subscribers in
2012, bringing the total to 23.9 million.
The company previously announced its forecast for 2013. It
expects to add 1.6 million self-pay net subscribers and generate
revenue of $3.7 billion. It expects free cash flow of $900
million and adjusted earnings before interest, taxes,
depreciation and amortization at $1.1 billion.