The Street is abuzz with chatter after Sirius XM (SIRI) released its third-quarter earnings report at 8 a.m. ET today. I personally took time off of work to listen to the call. Was it worth it?
No, I'm not so sure it was worth taking time off of work, but the call certainly did meet or beat expectations. Details of the call can be found in many places, such as fellow Seeking Alpha author Spencer Osborne's article. I found it interesting that the earnings call delivered very little outside of a basic reporting of the numbers. Q&A at the end seemed brief, and completely avoided a lot of questions many investors have, such as:
- Issues surrounding Liberty Media's (LMCA) looming takeover
- Expectations for 2013
- Additional detail or clarification on the possibilities of returning capital to shareholders
These were the issues that I hoped to hear details about. I sat eagerly awaiting them, only to hear a very brief Q&A session at the end followed by a "thank you" and a "goodbye" and a click followed by silence.
Was I impressed with the Q3 numbers? Certainly. While it seems many companies are missing analyst expectations and getting hit pretty hard in subsequent trading, Sirius XM beat on most metrics. While Sirius XM did come up a little short on EPS at $0.01, this was partially due to a rounding issue and mostly due to charges incurred in Q3 as Sirius XM paid off some rather high-interest debt. Q3 EPS would have actually beaten the Street estimates and been $0.03 without this charge being present, or 50% over Street estimates and 50% over last year's figures.
That's something to consider, and investors should make careful note of this point. As the headlines roll out about an earnings "miss," keep a level head and understand it was actually an earnings beat.
While trading today was initially strong, pushing the share price up 16 cents to $2.96 -- just below the 52-week highs -- end-of-day activity saw earlier gains crumble and the stock closed flat at $2.80. Should investors be concerned?
I don't think so. Long term, the story of Sirius XM continues to be reaffirmed after each and every conference call. Improving subscriber metrics, improving financials, increasing penetration, and increasing offerings such as partnerships with Nissan in telematics as well as personalized radio by year-end is the bullish story that doesn't appear to be quitting anytime soon. For those looking at it from a shorter-term perspective, I'd say examining the day and the volume that brought shares up vs. the comparatively light and brief end-of-day volume that brought shares down might be prudent. Despite the flat close, the vast majority of the day was about buying, increasing positions, and investing in Sirius XM.
I think even without 2013 guidance, clarity on Liberty Media, or details of a share buyback, the overall reaction to the conference call has been quite positive. While it may seem as if companies are being punished and punished hard during earnings reports, Sirius XM appears to be one of those companies that has a great edge right now. It seems investors will be patient waiting for some answers, and can expect to see clarity on these issues as time ticks onward. As Seeking Alpha author Little Apple has been saying, expect a blockbuster Q4 report.
Disclosure: I am long SIRI.