Sirius XM Sees 2Q Earnings Rise Thanks to Tax Benefit

Satellite radio broadcaster Sirius XM (NASDAQ: SIRI) reported revenue of $838 million for the second quarter, up 13 percent from the same period last year.The earnings were aided in no small part by a $3 billion income tax benefit. Net income for the quarter shot up to a massive $3.1 billion from $173 million last year.“SiriusXM continued its exceptional performance in the second quarter, adding over 600,000 subscribers, which represents a post-merger record, despite the mixed macroeconomic trends. We also attained a record-level free cash flow of $230 million – the highest single quarterly free cash flow figure in SiriusXM's history. We are very pleased with the strong operating results we have delivered since the merger, especially our performance in 2012, as we have grown revenue, tightly controlled expenses, and produced substantial growth in adjusted EBITDA and free cash flow,” said Mel Karmazin, SiriusXM CEO, via a press release. “We've also raised our subscriber, revenue, and adjusted EBITDA guidance as the Company exceeds its targets and as subscribers demonstrate how much they love our great content. We are excited to deliver our new SiriusXM On-Demand service to our subscribers via the internet and smartphones, and our program to launch a personalized music feature via these same channels by the end of the year is on track.”Anybody who has recently bought a car with satellite radio capability can tell you that Sirius XM run a very aggressive marketing campaign. If a customer chooses not to subscribe to the service after the free trial expires, they can expect to receive regular mail from Sirius offering one special deal after another. The company literally attempts to batter consumers into submission.It is difficult to know if it is working, as the company's profits have been impacted so significantly by the tax benefit. However, it reported profit of $3.1 billion. Subtract tax benefit, and that is $100 million compared to $173.3 million last year.However, the press release also points out that net subscriber growth is now approaching 1.6 million, so there are obviously plenty of customers succumbing to Sirius's tactics.On Tuesday, Sirius XM Radio traded at about $2.34, up roughly 3.7 percent.Follow me @BCallwood.