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Wednesday, September 14, 2011

Sirius XM stock up on release of optimistic guidance for 2012 – and a price hike

Mel Karmazin It is now clear just how much subscribers will be paying as of January 1, 2012: $14.49 a month, compared to the $12.95 a month that has been standard for several years. As of the New Year, Sirius XM is free to raise its rates. The company will also "adjust prices on many of our other programming packages." CEO Mel Karmazin had previously told analysts the price hike would be more than inflation.

On the financial side, CEO Karmazin says "our new guidance for 2012 demonstrates our expectation of robust growth." For 2012, the satcaster expects revenue to grow 10%, to $3.3 billion. It forecasts EBITDA growth of 20%, to about $860 million. And Karmazin, who has always highlighted free cash flow as a measure of performance, says it should grow 75% next year, to about $700 million. Sirius XM did not talk about projected subscriber numbers for 2012. As for this year, the continuing guidance is for net subscriber additions of about 1.6 million, revenue of $3 billion, adjusted EBITDA of $715 million and free cash flow "approaching $400 million."

The "SIRI" stock surged when the new guidance for 2012 was released just before 2pm Eastern time, as you can see on the stock chart, here.



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