Sirius XM Radio Inc. (SIRI), the largest U.S. satellite-radio company, reached an almost four-month high after a jump in subscribers prompted it to boost its annual profit forecast.
Sirius rose 4.6 percent to $2.30 at the close in New York, its highest closing price since April 9. The shares have gained 26 percent this year.
Adjusted earnings before interest, taxes, depreciation and amortization will be about $900 million in 2012, the New York-based company said today in a statement. Sirius had previously projected $875 million.
The company added 622,000 subscribers last quarter, bringing its total to a record 22.9 million. As Sirius grows, it faces a challenge for control of the company. John Malone’s Liberty Media Corp. (LMCA) is trying to take over Sirius -- an effort that has contributed to a 21 percent gain in the stock price this year through yesterday.
“Our increase in adjusted Ebitda guidance to approximately $900 million indicates strong confidence in our ability to continue to execute in the back half of the year,” Chief Executive Officer Mel Karmazin said in the statement.
A $3 billion income-tax gain helped net income rise to $3.13 billion, or 48 cents a share, from $179.4 million, or 3 cents, a year earlier. Sales climbed 13 percent to $837.5 million.
Liberty Media, Sirius’s largest investor, plans to take over the company when it receives approval from the Federal Communications Commission, according to a May 31 filing.
The move would allow Liberty to execute a so-called Reverse Morris Trust, which involves splitting off its Sirius stake as a separate entity, allowing Malone to save on paying capital-gains taxes if he were to sell his shares, according to James Ratcliffe, an analyst at Barclays Plc in New York.
“Our board and I am interested in trying to accomplish whatever Liberty wants to do as long as it’s in all of our shareholders’ best interest,” Karmazin said on a conference call today.
As for Karmazin’s future at the company, the Sirius board will deal with his contract, which expires at the end of the year, prior to the next earnings conference call, he said.
Liberty needs FCC approval to complete a takeover because Sirius holds airwave licenses issued by the agency. Sirius has opposed Liberty control in its own FCC filings.
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