SIRIUS XM Sees Cash Flow Positive 2009 (SIRI)

SIRIUS XM Radio (NASDAQ: SIRI) appears to have managed to outshine the recession in 2009.  The company disclosed today that it added just over 257,000 net subscribers in the fourth quarter of 2009.  It now has 18,772,758 subscribers.  More importantly, the company said that the preliminary data shows that the 2009 year-end will have over $100 million free cash flow.

The self-pay subscriber base gained 247,182 in Q4 to 15,703,932 subscribers, while total paid and unpaid trials included in the sale of a vehicle remained level with the prior quarter and the prior year at about 3.6 million.

This marks the first free cash flow period for an entire year.  That is a return to growth in subscribers and looks to be the highest growth since the third quarter in 2008.  The company is citing improved auto sales and conversion rates.

The notion of the sector improving was highlighted when Mel Karmazin noted, “better than anticipated self-pay churn.” SIRIUS said that the conversion rate to a self-pay subscription from a trial included in the sale of a vehicle for the fourth quarter of 2009 was 46.4%.  That is up from 44.2% in the fourth quarter of 2008.

The CFO said the company is on track to meet its guidance and report over $400 million in pro forma adjusted operating income.  This would be an improvement of over $500 million from the pro forma adjusted operating income for 2008.  It is also a gain of nearly $1 billion from 2007 before the SIRIUS-XM merger closed.

If these numbers sound good to you, it is because it so far sounds good to traders in the after-hours session.  Shares are up over 5% at $0.702, after closing down 0.3% at $0.668 in regular trading.

JON C. OGG