Boston, MA 10/14/2013 (wallstreetpr) – Sirius XM Radio Inc.’s (NASDAQ:SIRI) has announced the additional buyback of $2 billion of stocks financed through available cash, cash to be generated in the future through its operations as well as future borrowings. Sirius had announced a buyback for a similar amount ten months back, and they have reportedly acquired $1.6 billion worth of stocks with the balance expected to be acquired soon. Investors need not worry about the effect this will have on ratings. Moody’s has announced that there will be no immediate impact on credit ratings as the management has confirmed its 3.5x leverage target. Given its record of maintaining its leverage within targets, Moody’s is not worried on this aspect. It has also been able to pick up more than 476 million shares at an average price of $3.36, the current price being $3.88 as on October 11, 2013. The shares touched a 52 week high of $4 on October 8, 2013, establishing a nearly six year high even before the buy back was announced.
It has been a mixed four quarters for Sirius, the only satellite-radio provider in the U.S. Though revenues have been rising, earnings are showing mixed signs. It is lagging behind its peers and is currently focused only on the U.S. It is trying to develop new revenue streams outside the U.S., and there are expectations of it announcing new acquisition plans. The company has acquired a connected car services unit for $530 million though the acquisition and is expected to be completed in the last quarter only. Sirius is also looking at expanding its offerings from current music and talk shows by providing more value-added services.
The move to buyback shares has benefited Liberty Media (NASDAQ:LMCA) the most. Liberty had stepped in with a loan of $530 million to Sirius at the peak of the financial meltdown in 2009. The loan came with the caveat that Sirius will not adopt any poison pill provision to stop Liberty from taking over the company after a standstill period of three years. The takeover was completed in January, 2013, and the investment is now worth billions to Liberty.