Did Sirius XM Radio Inc (NASDAQ:SIRI) Right Decision Of Buyback?
Sirius XM Radio Inc (NASDAQ:SIRI) announced that it will be engaging in an additional buyback of its own stock worth $2 billion. Even back in December 2012, the company had announced a buyback and the size was the same that time too. As per estimates that have been put forward, it is likely that the company will buy back all the balance in the coming days. They have already bought back stock worth $1.6 billion.
The total market cap of this company is valued ay nearly $24 billion and this ensures that a buyback of $2 billion is of huge importance. The shares of the company has grown significantly in 2013, however, overall the performance results have been mixed.
The company stated that the buyback which they will be indulging in will be made with cash on hand along with their future cash and even future debt. Last year, when the company bought back its own stock, they paid a special dividend to their investors. However this decision of additional buyback hasn’t made a lot of investors happy.
Although, the value of stock of the company has increased significantly in recent times, the company is going through a lot of issues. The internet music streaming world is fiercely competitive and Sirius XM Radio Inc (NASDAQ:SIRI) is having a tough time in breaking out of the North America market. One of the key problems is the inability of Sirius XM Radio Inc (NASDAQ:SIRI) to be integrated in smart phones and this is perhaps one of the prime causes for the dismal performance of the company.
The main industry that it targets is the auto industry. However, with the growing popularity of iTunes radio, the company can see some grim days ahead. The growth in the company has been merely 4% in the last three months and it looks like they need to take the right actions to stay afloat.