Satellite radio company Sirius XM Radio, despite recording a greater net loss for the first quarter of 2009, says it is encouraged by higher sales.
New York-based Sirius XM on Thursday reported a net loss of $236.6 million, or 7 cents a share, compared with $104.1 million, or 7 cents, in 2008's first quarter. Sales grew to $587 million from $270.4 million in the year-ago quarter, while operating costs dropped 23 percent.
Subscribers to the company's services dropped to 18.6 million, from 19 million at the end of 2008, which Sirius XM attributes to reduced auto sales. The number of subscribers added during the quarter sunk to 404,400 from almost 626,000 during the year-ago quarter. However, the cost of gaining new subscribers was slashed to $61 per customer, a savings of 26 percent from $82 a year earlier.
Operating expenses in virtually all of Sirius XM's key segments decreased in the first quarter. Satellite and transmission costs dropped 23 percent, programming and content costs were down 10 percent, and the cost of equipment dove 35 percent.
On a pro forma basis, which excludes certain nonrecurring expenses, Sirius XM reported that operating earnings showed a profit of $108.8 million, compared with a pro forma loss from operations of $70.2 million in the previous year. Pro forma revenue rose to $605.5 million.
"With a 5 percent increase in pro forma revenue and a 23 percent decrease in cash operating costs, these results demonstrate our focus on improving profitability, despite slower automobile sales and a 2 percent sequential decline in satellite radio subscribers," Mel Karmazin, CEO of Sirius XM, said in a statement Thursday.
The earnings and sales results are being compared to the first quarter of 2008, before Sirius' acquisition of XM Satellite Radio, but Sirius XM looks at the results as if both were one company a year ago. The latest results also factor in the hit that Sirius XM took earlier this year, when it borrowed $530 million from Liberty Media to save it from potential bankruptcy.
"Satellite radio is now a cash flow growth story," Karmazin said. "First-quarter 2009 adjusted income from operations of $108.8 million is our second consecutive quarter of positive adjusted income from operations and represents an improvement of $179 million over last year's first-quarter pro forma loss from operations of $70.2 million."
For the outlook ahead, Sirius XM says it expects to see more than $350 million in adjusted income for 2009. This is an increase from the company's previous estimate of more than $300 million for 2009 adjusted income, which it provided on March 10 of this year.