Sirius XM - Still a Company on the Rebound

| About: Sirius XM (SIRI)

Sirius XM (NASDAQ:SIRI) announced full year and 4Q 2010 results on Tuesday morning, with record earnings and subscribers highlighting the report.

After taking in revenue of $726 million and adding 328,789 subscribers during the fourth quarter, Sirius XM closed the year with record numbers of $2.82 billion in revenue for the full year, with 20.2 million subscribers - both company records.

The numbers surpassed company guidance, although mixed in with the good news is the fact that with all the positive data, the fourth quarter actually netted a loss - and that's what it looks like most of the post-earnings headlines are focusing on.

The quarterly loss can be attributed to the elimination and restructuring of debt, some of it being retired early, which in the grand scheme of things - is actually a pretty good thing. That said, for those only reading the headlines, it will probably look like SIRI is heading backwards, when the truth is far from such.

Given that SIRI was trading down fairly significantly in the premarket hours Tuesday morning, it looks like the negative spin could create a nice 'buy the dip' opportunity for those that have missed the pre-earnings runup.

Rebounding auto sales and the reinvigorated economy have greatly benefited Sirius XM, a company whose stock was trading for a mere nickel just two years ago.

It also didn't hurt that the services of media powerhouse Howard Stern was retained (although I don't believe that was an absolutely necessary move for SIRI to succeed) and the NFL contract was renewed, while at the same time the general content offered by the SatRad company is improving.

Guidance provided by CEO Mel Karmazin for 2011 followed the trend of growth set in 2010 as 1.4 million subscribers are expected to be added during the year, with revenue topping three billion dollars.

It should also be expected, however, that much of the free cash flow generated from operations will be used to continue paying down the debt.

The earnings report offered no surprises, but continued to show that Sirius XM is realizing strong growth in the midst of economic recovery.

Analysts have once again started jumping on board the SIRI train, and strong growth into 2011 should add continued justification for a further rise in share price, although money spent paying down the debt will keep the quarterly numbers from smelling like roses.

It's important to emphasize, however, that paying down the debt - and doing it early - is a very healthy undertaking for the company, regardless of how negative the headlines read.

Don't be fooled, Sirius XM is still a company on the rebound.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SIRI over the next 72 hours.

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Tagged: , Broadcasting - Radio, Earnings
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