April 14, 2010 / 11:46 AM / 10 years ago

UPDATE 2-Sirius adds 171,000 subscribers; stock jumps

* Q1 net subscriber additions exceed 171,000

* Sirius ends Q1 with 18.9 mln subscribers

* Expects strong growth in income from operations

* Shares rise 9.3 percent to $1.05 (Adds analyst comment, updates stock price)

NEW YORK, April 14 (Reuters) - Sirius XM (SIRI.O) added more than 171,000 net subscribers to its pay-radio service in the first quarter, benefiting from better car sales and users signing up after free trials, and its stock rose more than 9 percent.

Sirius, home to personalities like Howard Stern and Oprah Winfrey, said on Wednesday that total subscriber additions increased by 29 percent, while deactivations fell by 11 percent from a year earlier.

The satellite radio provider said it had ended the quarter with 18.9 million subscribers, up 344,765 from a year earlier.

Lazard Capital Markets analyst Barton Crockett called the results “positive” and said Sirius shares could improve as result. He had expected the company to lose 160,000 subscribers in the first quarter.

Sirius, which gains most of its new customers from new car purchasers, said about 45.2 percent of those who had a free trial when they bought a vehicle kept the service. That is up from 44.6 percent in the first quarter of 2009.

Chief Executive Officer Mel Karmazin attributed the results to “the benefits of a recovering auto industry and an improving economic environment for consumers.”

Indeed, U.S. auto sales jumped 24 percent in March, their best showing since August [ID:nN01149542]. Toyota Motor Corp (7203.T) led the way with a 41 percent surge.

Karmazin expects Sirius XM to report a solid revenue increase and strong growth in pro forma adjusted income from operations for the first quarter.

The rosy outlook comes after Sirius XM earlier this year posted its first quarterly profit since the 2008 merger of Sirius Satellite Radio and XM Satellite Radio [ID:nN25238128], and suggests the company remains stable.

That’s a stark change from its status a little more than one year ago, when Sirius flirted with bankruptcy as it faced a hefty debt load and weak auto sales.

Shares of Sirius rose 9.3 percent to $1.05 in afternoon Nasdaq trading. (Reporting by Franklin Paul; Editing by Lisa Von Ahn)

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