Sirius Posts Major Sales Gain, Cuts Loss
By Steve Smith and Amy Gilroy -- TWICE, 11/20/2006
New York — Sirius Satellite Radio reported a 150 percent increase in revenue for the third quarter and reduced loss due to a 3 million increase in new subscribers during the past year.
Sirius said that revenue for the quarter hit $167.1 million due to the subscribe increase. The company also reported a 23 percent improvement in cost per gross subscriber addition from the year-ago quarter.
Sirius reported a net loss of $162.9 million for the third quarter compared with a net loss of $180.4 million for the same period last year. The company had an adjusted third quarter loss from operations that was down $22.2 million, or 21 percent year-over-year, to $83.2 million vs. $105.4 million for the same period last year.
The satellite radio company ended the third quarter with 5.12 million subscribers, 135 percent above third quarter 2005's 2.17 million. During this period Sirius added 441,101 net subscribers, a 23 percent increase over last year's third quarter that had net subscriber additions of 359,294.
For the fourth consecutive quarter, Sirius claimed it led the satellite radio industry in net subscriber additions, capturing a record 61 percent of total satellite radio net additions in the third quarter. Sirius added about 205,900 net subscribers from its retail channel and about 236,500 net subscribers from its automotive OEM channel during third quarter.
Mel Karmazin, CEO, said, "We are well prepared to meet fourth quarter demand and remain focused on achieving positive free cash flow."
On a conference call, Karmazin said that by next year in traditional radio, only ClearChannel and CBS Radio will generate more revenue than Sirius.
Karmazin said Sirius' retail share for net new subscriber additions for the third quarter was 75 percent. Looking at market share figures from NPD (whose data excludes Wal-Mart and warehouse clubs), Sirius' retail market share was 57 percent in September 2006, 57 percent for the quarter and 58 percent year to date, he said.
Sirius acknowledged "softness" in the last two months in retail sales of some consumer electronics products and in satellite radio overall, but said it expects a strong fourth quarter at retail. The company promised good supplies of its radios including the new wearable Stilletto. Sirius has begun taking delivery of its fourth-generation chipset that will be included in products starting in the first quarter.
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