Sirius XM Reports Income and Subscriber Growth

Sirius XM said revenue rose 12 percent, $897 million, from the period a year earlier, but was lower than the $906 million analysts had predicted.

Net income increased 15 percent to $124 million, while earnings before interest, tax, depreciation and amortization — adjusted to eliminate some charges including the effect of the 2008 merger between Sirius and XM — were $262 million, up 26 percent from a year earlier.

Sirius XM earned 2 cents a share, one cent less than analysts had predicted.

The company’s subscriber growth continued to be a bright spot, even after a rare price increase last year. It was the first time Sirius had raised the subscription rate; XM had done it once before. Sirius XM gained 453,000 subscribers in the quarter, bringing its total to 24.4 million. In the last two years its subscriber ranks have grown 19 percent.

“Sirius XM’s first-quarter results show a continuation of our trend of strong, profitable growth,” Mr. Meyer said in a statement.

One concern for investors, however, is an increase in “churn” rate, a measurement of subscriber turnover. In recent years, that number had been gradually reduced to 1.9 percent, but in the most recent quarter it was 2 percent.

Mr. Meyer, who had been Sirius’s president for sales and operations since 2004, was named interim chief executive in December after the departure of Mel Karmazin. He was appointed to the post permanently in a separate announcement on Tuesday by Gregory B. Maffei, who became chairman on April 10.

Mr. Maffei is the president and chief executive of Liberty Media, which since 2009 had been Sirius XM’s largest investor and took over the company, which is based in New York, last year by acquiring a majority of its shares.

Sirius XM shares rose 5.9 percent on Tuesday to close at $3.25.

RIM Posts Smaller Than Expected Loss as Subscriber Base Slips

RIM, which hopes to revive its fortunes and reinvent itself via the launch of a brand new line of BlackBerry 10 devices next month, caught investors off-guard on its quarterly conference call, when it said it plans to alter its service revenue model - a move that will pressure the high-margin business that accounts for about a third of RIM's sales.

"RIM provided few details regarding the economics of these changes, thus adding a large cloud of uncertainty to the primary driver of its profitability, which we view as especially worrisome given risks already surrounding the firm's massive BlackBerry 10 transition," said Morningstar analyst Brian Colello.

Those subscribers who need enhanced services like advanced security will pay for these services, while those who do not use such services will generate much lower to no service revenue, RIM Chief Executive Thorsten Heins told analysts and investors on a conference call on Thursday.

"I want to be very clear on this. Service revenues are not going away, but our business model and service offerings are going to evolve ... The mix in level of service fees revenue will change going forward and will be under pressure over the next year," cautioned Heins.

The news startled investors, who had earlier in the evening pushed RIM's stock more than 7 percent higher in post-market trading, after the company reported a narrower-than-expected quarterly loss and said it boosted its cash cushion ahead of next month's crucial launch of the BlackBerry 10 smartphone.

RIM's shares have for weeks been on a tear as optimism around BB10 has grown. Following RIM's surprise announcement on service revenues, however, the stock ended 9 percent lower at $12.85 in trading after the closing bell.

Analysts also expressed concern about the decline in RIM's subscriber base.

"The early reaction was probably just 'Hey, numbers looked OK, better loss, the cash flow was good' but if you know the company, you're looking at the subscriber base falling off," said Mark McKechnie at Evercore Partners in San Francisco.

CASH BALANCE

One reason the shares rose earlier was RIM managed to build up its cash cushion to $2.9 billion from $2.3 billion in the previous quarter.

Analysts have been keeping a sharp eye on the size of RIM's cash pile, as RIM will need the funds to manufacture and effectively promote BlackBerry 10 in a crowded market.

RIM is counting on the new line to claw back market share lost in recent years to the likes of Apple Inc's iPhone and a slew of devices powered by Google Inc's Android operating system.

"They've done a great job at generating cash," said Raymond James analyst Tavis McCourt in Nashville. "They're certainly in a much better position than they were three or four quarters ago."

The Waterloo, Ontario-based company said it is now testing its BB10 devices with more than 150 carriers - up from about 50 carriers as of the end of October. RIM expects more carriers to come on board ahead of the formal launch of BB10 on January 30.

Positive feedback from developers and carriers around RIM's new BlackBerry 10 devices has buoyed the stock in the last three months. Despite the plunge in RIM's share price on Thursday, the stock has more than doubled in value the last three months.

SMALLER-THAN-EXPECTED LOSS

On an operating basis, RIM fared a little better than Wall Street had expected. It reported a loss of $114 million or 22 cents a share, excluding one-time items. Analysts, on average, had forecast a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.

RIM also reported a surprise net profit of $9 million, or 2 cents a share, for its fiscal third quarter ended December 1, on the back of a one-time income tax related gain. That compared with a year-ago profit of $265 million, or 51 cents.

RIM said it shipped 6.9 million smartphones in the quarter, even as its subscriber base fell to about 79 million in the quarter from about 80 million in the period ended September 1.

In recent years, RIM's user base has grown, even as the BlackBerry lost ground in North America and Europe, boosted by gains in emerging markets. While eye opening, the shrinkage was not as bad as some observers expected during the last quarter before the BB10 launch.

"We're encouraged that the subscriber base only declined slightly during a very public transition, and BlackBerry sales were about what we expected," said Morningstar's Colello, who is based in Chicago.

(Reporting by Euan Rocha; Additional reporting by Alastair Sharp, Cameron French, Allison Martell and John Tilak in Toronto; Editing by Janet Guttsman, Frank McGurty, Jan Paschal and Chris Gallagher)

AT&T Revenue, Subscriber Growth Miss Wall Street View

The No. 2 U.S. mobile service provider said it had 151,000 net new subscribers in the quarter, compared with the average expectation for 358,000, according to five analysts contacted by Reuters.

Its bigger rival, Verizon Wireless, added 1.5 million subscribers in the quarter.

AT&T said a shortage of the latest iPhone, which went on sale in the last week of the quarter, meant that the vast majority of third-quarter iPhone sales went to existing customers, stunting its growth of new customers.

Slow customer growth likely helped the company post better-than-expected earnings for the quarter as new customers come with a hefty cost for wireless service providers.

AT&T's profit rose to $3.64 billion, or 63 cents per share, from $3.62 billion, or 61 cents per share, and was 3 cents ahead of Wall Street expectations, according to Thomson Reuters I/B/E/S.

However, revenue fell to $31.46 billion from $31.48 billion and missed the analysts' average estimate of $31.59 billion, according to Thomson Reuters I/B/E/S.

The company also raised its target for 2012 free cash flow by $2 billion to $18 billion.

Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.

(Reporting by Sinead Carew; Editing by Lisa Von Ahn and Jeffrey Benkoe)

Verizon’s Profit Climbs as Subscriber Growth Slows

Verizon Wireless, the nation’s largest cellphone carrier, is not gaining as many new contract subscribers as it once was. But its profit remains strong thanks to swelling revenue from mobile data — the fees it collects for Internet use — and healthy smartphone sales.

Verizon Communications, the parent company of the wireless business, reported Thursday that its profit in the second quarter rose 13.4 percent to $1.8 billion, or 64 cents a share, from a year ago.

The company said revenue climbed 3.7 percent to $28.6 billion.

The profit was in line with analysts’ expectations, according to a survey by FactSet.

The company’s overall profit, which includes pretax operating income for Vodafone, which owns 45 percent of Verizon’s wireless unit, was $4.3 billion, a 19.3 percent increase.

Verizon, which is based in New York, said smartphone sales and revenue from its cellphone subscribers helped its results.

“Verizon Wireless has once again demonstrated its industry leadership, combining strong revenue growth with record margins and high customer loyalty,” Lowell McAdam, Verizon’s chief executive, said in a statement.

In the quarter, Verizon Wireless added 888,000 contract subscribers, the most valuable type of customer for the company, down from 1.26 million a year ago. But total revenue from mobile data was $6.9 billion, up 18.5 percent from a year ago.

Those results perpetuate an industrywide trend: contract subscriber growth is slowing because most people who want cellphones have them. So now the carriers are improving profits by using different pricing structures for mobile data, or by attracting one another’s customers with new smartphones and faster data networks.

Verizon sold 5.9 million smartphones in the quarter, including 2.9 million Droid handsets and 2.7 million iPhones. Typically, iPhone sales slow in summer because many consumers expect Apple to introduce an upgraded version in the fall. Nonetheless, Apple’s handset aided Verizon’s growth: A quarter of the people buying iPhones were new to Verizon. Over all, 73 percent of Verizon’s phone sales to subscribers were smartphones.

Verizon is leading the race in the United States to build faster fourth-generation networks, using a technology known as Long Term Evolution. It has LTE deployed in 337 cities, compared with AT&T, which has installed it in 47 cities.

In late June, Verizon introduced “shared data” plans, which allow customers to pay for a pool of wireless data and share it across multiple smartphones, tablets and laptops, a first for the American wireless industry. For new Verizon customers, shared plans and prepaid plans will be the only options. The older tiered data plan is no longer available to new customers.

The shared plans took effect too late to influence Verizon’s earnings, but some analysts said imposing shared plans on new subscribers was a bold move. The plans offer value to high-income families that already spend a lot for data, text and phone services, but not to people who are light users and are trying to save money.

Fran Shammo, Verizon’s chief financial officer, said in a conference call that the company did not expect shared data plans to have an immediate impact. But he said that the new pricing structure was already prying some customers away from their older unlimited data plans, which will help the company make more money over time.

“The benefit we do see is that we are seeing some 3G unlimited customers move into our 4G shared data plan product,” Mr. Shammo said. “That is excellent for us.”

Following Verizon, AT&T introduced its shared data plans on Wednesday with nearly identical pricing.

Tero Kuittinen, an independent mobile analyst and vice president of Alekstra, a company that provides services to help consumers reduce their cellphone bills, said that the shared data plans were a sign that Verizon and AT&T had grown confident that they would not lose subscribers to smaller rivals, no matter how expensive their plans become.

“This is what happens in a duopoly,” Mr. Kuittinen said in an interview. “One company raises prices, and the other does the same thing. It looks like AT&T and Verizon have both concluded that they’re not serious competitors.”

Shares of Verizon Communications declined $1.35, or 2.9 percent, on Thursday to close at $44.54

This article has been revised to reflect the following correction:

Correction: July 19, 2012

An earlier version of this article misspelled the name of the company that is a part-owner of Verizon Wireless. It is Vodafone, not Vodaphone.