SIRIUS XM Heading Mostly in Right Direction (SIRI)

Trusting analyst estimates on penny stocks and cult stocks is a tricky business.  But SIRIUS XM Radio Inc.(NASDAQ: SIRI) is trading up on heavy volume after its earnings this morning.  The satellite radio monopoly had a 27% revenue gain to $618.7 million, which included some of the XM Radio gains from the merger.  Earnings were a net loss of $149.2 million or -$0.04 EPS, but this included a charge of $138 million.  If you back out the charges and items, SIRIUS managed a non-GAAP $106 million profit vs a non-GAAP loss of $37 million a year ago.  On an EPS basis, that would break-even. The estimates from Thomson Reuters were -$0.02 non-GAAP EPS and $608.7 million in revenue.

The company also listed roughly 18.5 million subscribers, which is up 103,000 sequentially but down 2% from last year.  Subscriber churn rates during the quarter came in at about 2% as well.

Sirius also noted that it expects its adjusted income from operations to show a 20% gain in 2010 after mid to high single-digit revenue growth.  The company expects its free cash flow and its subscriber count to keep growing as well and this year’s adjusted operating income should go above $400 million.

Shares are up almost 8% and at almost $0.66 on right at 3.3 million shares in pre-market trading with 15 minutes until the market opens.  The 52-week high is now only $0.78 from when this stock was on fire in August.

The takeaway here is that the direction is heading the right way.  There are some obvious negatives as you would expect.  So far the winning direction is the stance that the glass is half-full rather than half-empty.

JON C. OGG