Sirius XM Radio Adds 334,000 Subscribers in Third Quarter
UPDATED: The satellite radio company also reported record revenue, though the stock reacted poorly.
Sirius XM Radio added 334,000 subscribers in the third quarter to 21.3 million and the company posted record quarterly financials, but Wall Street was disappointed nevertheless and the stock tanked early Tuesday before recovering to a 3 percent loss.
The satellite radio company reported revenue of $763 million, up 6 percent over third quarter 2010 revenue of $718 million, and profit that soared 54 percent to $104 million.
Analystys, though, were hoping for slightly more revenue and about 66,000 more subscriber additions, thus Sirius XM shares dropped 8 percent in early trading before a partial recovery. They ended the day down 6 cents to $1.73, giving the company a $6.5 billion market capitalization.
Still, some noted that Sirius has fared well against upstart competitors like Pandora, suggesting that its offering, which includes, sports, news comedy and talk, has massive appeal beyond digital music aficionados.
'We are growing in what we all know is a very weak economy and in a market that has seen plenty of new competition," CEO Mel Karmazin told analysts during a conference call on Tuesday.
Pressed by an analyst, Karmazin also defended a decision to boost subscriber fees by $1.50 month next year by stressing it amounts to a nickel a day and that complaints thus far have been muted.
"I mean, the price increase is not in any way, shape or form egregious," he said. "It's not something that we're doing regularly, and we don't think that it should impact our growth next year."
PHOTOS: Hollywood Golfers' Handicaps
Responding to the weak stock price after the earnings release and conference call, an analyst at Seeking Alpha wrote: "It needs to be understood that this company is running on all cylinders. When a company reports a 'record-breaking quarter,' that is not a company to run away from."