Sirius & XM Investors Hunker Down For Earnings (SIRI, XMSR)

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Monday may be quite an interesting day for satellite radio investors.  Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio (NASDAQ: XMSR) will both report earnings.  While everyone will be breaking down the subscriber additions and the marketing costs, you know everyone wants to know what the companies each think is going on inside the FCC merger approval process. 

Sirius Satellite Radio Inc. (NASDAQ: SIRI) will have its results on Monday after the close, with a conference call to follow at 4:30 PM EST.  First Call has estimates at -$0.07 EPS on $272.3 million in revenues.  For the coming quarter estimates are -$0.08 EPS on $289.1 million in revenues, and for Fiscal Dec-2008 estimates are -$0.30 EPS on $1.17 Billion in revenues.  With a $2.73 close on Friday, shares are about 15% off of the 52-week low of $2.36.

XM Satellite Radio (NASDAQ: XMSR) is reporting earnings Monday morning, and its conference call will be at 10:00 AM EST.  First Call has estimates at -$0.39 EPS on $313 million in revenues.  Estimates for the following quarter are -$0.43 EPS on $324.2 million in revenues, and for Fiscal Dec-2008 the estimates are -$1.70 EPS on $1.34 Billion in revenues.  With a 4% drop on Friday and a close of $11.80, shares are still up 22% from the 52-week low of $9.62.

With a proposed ratio of 4.6 shares of Sirius per XM share, that wouldmerit a full merger value today of $12.55.  This means that there iscurrently only a 6.4% merger-arb spread at today’s prices.

While the companies may continue on their comments about the merger, it will be perhaps more interesting to get the body language on the company operations to see if there is any underlying body language showing that either company gives its standalone presentation. Both have noted they would be light on guidance until after they get merger approval.

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Jon C. Ogg
May 10, 2008

Jon Ogg is a producer and editor of the "10 Stocks Under $10" weekly newsletter; he does not own securities in the companies he covers.