By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Sirius XM reported higher sales and profits for the fourth quarter and said it is planning a iPhone/iPod Touch product.
The company reported higher pro forma revenues and an adjusted pro forma profit and 10 percent more subscribers for the fourth quarter, ended Dec. 31.
Fourth-quarter pro forma revenue grew 16 percent to $644.1 million, compared with $557.5 million in the previous year's fourth quarter. The pro forma adjusted loss from operations was $31.8 million compared to a loss of $224.1 million for the fourth quarter of the previous year.
Total subscribers by the end of the year were 19 million, up from the previous year's 17.3 million.
For the year, total pro forma revenue was $2.4 billion, compared with the previous year's $2.1 million, an 18.4 percent gain. The company said it was driven by an increase in subscriber revenue and a net increase in subscribers.
Sirius XM's pro forma adjusted loss decreased $429.2 million in 2008 to $136.3 million. The prior year's loss was $565.5 million. The improvement was due to an 18 percent increase in revenue and a 4.2 percent decrease in expenses.
In a conference call with analysts the company said it plans to offer an iPhone/iPod Touch application in the second quarter.
The upcoming iPhone application would stream Sirius XM to iPhones and iPod Touch devices and is now in “rigorous testing,” said chief financial officer David Fear during a conference call with analysts. He added, “This will permit an estimated 7 million iPhone users and iPod Touch users to access Sirius XM content if they are paid subscribers.” And if they become a new subscriber, they won't have to purchase a new radio, he explained.
Sirius XM is also planning measures to boost retail sales through advertising and to direct-market to used car buyers, it said.
Clearly glad to have what he called “the most miserable year of his life” behind him, Sirius XM CEO Mel Karmazin said, ironically, it is the merger that will help Sirius weather the recession until car sales improve.
“We, unlike most companies, have a clear ability to cut costs dramatically in 2009, without harm to the long-term business as a result of our merger,” he said explaining that there are still redundancies in call centers, and in IT expenses that can be exploited and more contracts are coming due that can be renegotiated.
The company admitted to disappointing sales at retail in the fourth quarter that resulted in a loss of 131,000 retail subscribers and a total net gain of only 83,000 subscribers for the quarter from OEM additions.
Jim Meyer, president of operations and sales, added that the Circuit City bankruptcy had a big impact. “Circuit City was a very strong supporter of satellite radio and where those shopper went, particularly if they went to mass-market distribution, has been less supportive of satellite radio and that's something we're going to address in the second half of this year.”
As for its recent deal with Liberty, Karmazin quipped, “We believe that it's a very good deal for Liberty and a very, very good deal for our company, considering where some of you had us going.”
He said he has been talking over the last few days directly to Chase Carey, president and CEO of DirecTV, in which Liberty has a controlling interest. “So we think there are opportunities there to work with lots of partners including DirecTV in ways of adding subscribers for both. It wouldn't be hard to think about that DirecTV might be able to have a special package for subscribers to get Sirius at an attractive price. It behooves us to consider every possible way we can grow our profitable subscriber base and our revenue.”
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.