Sirius XM Posts $4.88 Billion Write Down

Sirius XM posted its third quarter results yesterday, including a $4.88 billion net loss, about $1.93 per share. $4.8 billion of that is a write-down of goodwill related to the July merger of Sirius and XM radio.

Sirius XM posted its third quarter results yesterday, including a $4.88 billion net loss, about $1.93 per share. $4.8 billion of that is a write-down of goodwill related to the July merger of Sirius and XM radio. When considering the pro forma figures, which assume that the two companies were one a year ago, it isn’t quite as bad. The pro forma third quarter loss was $217 million, compared with last year’s loss of $265.5 million. The pro forma revenue actually rose 16 percent to $613 million and subscribers are up to 18.9 million, a 17 percent rise over the last year.

Having watched its stock prices plummet to well below a dollar, Sirius is working to refinance debts totaling about $1 billion due in 2009. It has already decreased a $300 million debt due in February by refinancing down to $210 million. Much of its suffering stems from the overall downturn in the economy, particularly in the auto industry. Most of the company’s new subscribers come from purchasers of vehicles with the satellite radios installed. CEO Mel Karmazin told analysts, “We think the environment sucks. It is not like we’re doing something wrong. It is that, unfortunately, we do not have a whole lot of control over what cars are getting sold. We do our best.” He remains confident in the company, pointing out that the churn (rate at which customers leave) was unchanged from 2007, staying at 1.7 percent. Sirius expects to end 2008 with 19.1 million subscribers, growing to 20.6 million by the end of 2009.