Sirius (SIRI) second quarter earnings demonstrated once again that, even after a merger with XM the new entity is not a viable business. The company’s gross subscriber additions were 1,029,287, barely above the 1,002,145 in the same quarter last year.
The rate at which revenue is increasing also moderated. For the quarter, sales hit $283 million, up from $226 million last year. Sirius had a net loss of $84 million compared to $134 million a year ago. Revenue per subscriber per month actually dropped modestly to $10.49, a sign that the company has very little pricing leverage.
Sirius still has total debt of nearly $1.3 billion and total liabilities of over $2.3 billion, a figure greater than its market cap.
The company depends on new cars sales for most of its new subscribers. With the automotive industry losing ground each month, it will be harder and harder to pick-up customers.
It is still not clear that Sirius can save a great deal of money in the merger. If subscriber growth remains modest and yield-per-customer keeps falling, it will not matter.
Douglas A. McIntyre
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