Sirius XM Radio Inc (NASDAQ:SIRI) has announced an additional $2 billion buyback of its own stock today.The buyback is the same size as the one that the satellite radio provider announced in December of 2012. Estimates suggest that the company has already bought back $1.6 billion of its own stock and will buy back the balance in the coming months before that agreement expires.
Sirius has a total market cap of just over $24 billion on today’s market making an additional $2 billion buy of the company’s stock a significant amount. Shares in the company have grown rapidly in value through 2013, though the company’s stock has seen mixed results in the last three months. Since January 1, stock in Sirius XM Radio Inc (NASDAQ:SIRI) is up around 34%.
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The company said that the buyback will be financed by cash on hand, future cash and future debt. The Sirius XM Radio Inc (NASDAQ:SIRI) buyback last year came alongside a special dividend paid directly to investors. The $2 billion buyback is a significant number, but investors don’t seem all that pleased with the move this afternoon.
On today’s market shares in Sirius XM Radio Inc (NASDAQ:SIRI) traded down a fraction. There were fairly strong rumors that the company would announce a buyback, so it may already have been priced into the stock.
Sirius XM problems
Despite the massive growth in the value of Sirius XM Radio Inc (NASDAQ:SIRI) stock, there are some big problems at the company. It is having no success breaking out of the North American market and the internet music streaming world is getting more competitive every day. The fact that Sirius is not integrated into the smart phones of users, like competitor Pandora Media Inc. (NYSE:P), is a problem.
Sirius XM Radio Inc (NASDAQ:SIRI) has managed to stay in business by concentrating on the auto industry. Data connections can be unstable, a point that Sirius is able to beat internet music services on. Apple Inc. (NASDAQ:AAPL) seems resolved to break into the auto industry, however, and that iTunes Radio could mean trouble for Sirius.
In the last three months shares in Sirius XM Radio Inc (NASDAQ:SIRI) have grown by just 4%. The Nasdaq grew by close to 6% in the same period. The lag may be due to the company’s massive growth earlier in the year or a growing unease among investors about the company’s prospects.