4 Dates for Sirius XM Investors to Circle
It' going to be an eventful next few months for Sirius XM Radio (NAS: SIRI) , and most of it should be good. Let's go over a few days that shareholders should already be looking forward to in the coming months.
Sirius XM investors may not take Clear Channel (OTC: CCMO) seriously, but the terrestrial giant is investing a lot of might and star power into promoting an upgrade of its iHeartRadio app.
Next month, Clear Channel is hosting a two-day music festival in Las Vegas to promote the streaming application's update. Not so humbly self-billed as "the biggest live music event in radio history," magnetic recording stars including Lady Gaga, Coldplay, and Jay-Z are scheduled to take the stage to show the terrestrial radio operator some promotional love. According to Clear Channel, the music festival sold out 10 minutes after tickets were put on sale to the general public in July.
The iHeartRadio app is already a popular download, allowing listeners to check out live streams of 750 of Clear Channel's terrestrial radio stations. The free app is going to get upgraded next month, offering "custom radio like Pandora but with more songs, more control, and no commercials through the end of the year," according to festival emcee Ryan Seacrest.
This will obviously be a bigger threat to Pandora (NYS: P) than to Sirius XM, but having a well-promoted force offering commercial-free music streams for free through the end of the year may be temporarily problematic for Sirius XM's value proposition to smartphone owners with Bluetooth-friendly dashboards.
This date marks the beginning of Sirius XM's fourth quarter.
In its quarterly conference call earlier this month, CEO Mel Karmazin confirmed that Sirius XM 2.0 is still on track to be introduced by year's end.
The first next-gen receivers will hit retailers in time for this year's holiday shopping season, and at least one major automaker will begin selling new cars with Sirius XM 2.0 receivers as factory installations.
What's so special about Sirius XM 2.0? What we do know is that it will allow for "on demand" streaming and extended time-shifting. The new layout will also allow Sirius XM to crank out 25% more channels, and Sirius XM has made it clear that a good chunk of that will be content geared toward the presently underserved Latino market.
Sirius XM has reported its third-quarter results on the first Thursday of November in each of the past two years, so this is likely the date -- or certainly near the date -- of the company's next financial update.
Sirius XM is coming off a strong quarter, one that found it bumping its free cash flow and subscriber targets higher. Analysts see another profitable quarter out of Sirius XM -- and they are likely to get it.
Sirius XM should have been able to increase its rates by now -- three years after the completion of the defining merger between Sirius and XM -- but a class action lawsuit settlement is pushing any increase until 2012.
Higher rates are coming. Karmazin has emphasized that in each of the last two conference calls. How much? Who -- if anyone -- will be grandfathered into the old rates? These are questions that Sirius XM is tactfully in no hurry to answer.
Even the slightest increase will be material, especially if it doesn't force a spike in churn.
Revenue growth has been hard for Sirius XM to come by this year. Analysts see Sirius XM growing its top line by a mere 6% this year, well short of the 12% and 10% spurts expected out of satellite television leaders DIRECTV and DISH Network, respectively. If Sirius XM is able to keep its subscriber count intact or ideally grow it in 2012 despite a price hike early in the year, double-digit revenue growth will be a slam dunk.
Keep watching, Sirius XM investors.
Which of these four dates do you think will be the most important for Sirius XM? Share your thoughts in the comments box below.
At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Longtime Fool contributor Rick Munarriz has been a subscriber to Sirius since 2004. He does not own shares in any of the stocks in this article. He is also a member of theRule Breakersanalytical team, seeking out the next great growth stock early in its defiance.
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