Evaluation Of Sirius

SIRIUS SATELLITE RADIO (SIRI)

Financial Analysis 2005

The company that I have chosen to do an analysis on is Sirius Satellite Radio. It is known as SIRI on the stock page. This company has its corporate headquarters in New York City. There are many other branches of this company located in Houston, Memphis, Nashville, and Los Angeles. The company was incorporated in 1990 as a Satellite Radio and later changed it name to CD Radio in 1992. Within six years it became known Sirius Radio in 1999.

Looking at the recent trends of satellite radio in December 2004 it had about 800,000 customers where as in December of 2005 it was carrying about 3 million customers. The company has set their goals fairly high at the beginning of its last quarter. The expected reached for the end of 2004 to the beginning of 05 was to have reached at least 1 million customers it surpassed that by reaching 1.1 million. At the end January of it was hoping to reach at least 2.5 million where as it was sitting at 3 million. Will the novelty of this wear off? That is the question being asked through out the industry of satellite radio.

While viewing their income statements for the past year there has been a substantial increase by at least 300%. Total Revenue for December 2004 was $66.9 million where a year later it was at $242.2 million. In that time frame it appears that the gross profits were increased by $324.2 million. So overall, I believe it would be a positive increase for gross profits over the upcoming years. When asked if net income was going to be rising or falling, it was, looking back the previous years of net income it shows that it is falling, but is that because of the market today? From December of 04 to December of 05 the net income fell nearly $150 million, which is improving compared to December of 03 to 04 net income fell almost $500 million. So I would have to say that over the years it will steadily improve as the market grows for this product. Looking at the decrease of net income and all of the other factors, I feel that it is most of them contributing to the decline and it is not just the gross profit, operating expenses or the other expenses.

As the company keeps bringing in big names to its stations the customer base will show a steady increase, as people are wanting to hear more music with less commercials and hearing a popular name on the radio vs a Joe blow from the street will make a difference. People like to be entertained not informed all of the time.

While I was