NEW YORK (Reuters) - Sirius XM Radio Inc’s first-quarter revenue was boosted by more subscribers, but it said lower car sales in the wake of the earthquake in Japan could hurt its subscriber growth this year.
The company, home to programing by Howard Stern and Major League Baseball, depends on the car industry to attract new subscribers from new car owners who receive free radios in their vehicles. Its services are featured in several car brands, including Toyota Motor Corp
About half of the listeners who receive a few months of free radio with their new car later sign up for the full service.
It added a better-than-expected 373,064 subscribers in the quarter, bringing its total listener base to 20.6 million people. Analysts were expecting additions in the 200,000s, according to Lazard Capital Markets analyst Barton Crockett.
The company left its subscriber forecast unchanged at 1.4 million additions this year. It would have raised its forecast were it not for supply issues stemming from the earthquake and tsunami in Japan two months ago, it said in a statement.
“With the issue of Japan, there’s speculation that total car sales might drop so that’s why Sirius XM’s guidance looks very conservative for the rest of the year,” said Gabelli & Co analyst Brett Harriss.
Sirius XM’s chief financial officer David Frear told analysts on a conference call Japan’s supply issues did not hurt auto sales in April and is “feeling pretty good” about May. After May, the situation is unclear, said Chief Executive Mel Karmazin.
“It is not entirely clear what our (car) partners will experience,” Karmazin said, adding that supply issues will not effect the manufacturing of the physical satellite radios.
On Tuesday, General Motors Co and Ford Motor Co reported strong U.S. sales gains in April. Toyota and Honda Motor Co Ltd will release their numbers later on Tuesday and analysts expect them to be weaker because of the earthquake in Japan.
Sirius XM expects full-year revenue to be about $3 billion this year, slightly shy of analysts’ estimates of $3.07 billion.
Net income rose to $78.1 million, or 1 cent per share, from $41.5 million, or 1 cent per share, a year earlier. The company said its earnings per share was the same as a year ago because the number was rounded for accounting.
Revenue rose 9 percent to $723.8 million. Analysts were expecting revenue of $736 million, according to Thomson Reuters I/B/E/S.
The company’s shares were 8.9 percent higher at $2.08 in afternoon trading on the Nasdaq.
Reporting by Liana B. Baker; editing by Dave Zimmerman, Derek Caney and Andre Grenon