Sirius XM (NASDAQ:SIRI) May Buy Back Shares in 2012

While Sirius XM (NASDAQ:SIRI) will have to do much better if they are going to buy back shares in 2012, hints from Sirius CEO Mel Karmazin are that he's considering doing that with the free cash flow of the company. He sees it as a better alternative than paying out dividends.

That especially true of Sirius, which is so heavily dependent on the health of the fickle car industry for its success.

They could offer a dividend and have to retract it in the near future on declining auto sales, being such a cyclical industry.

So a share repurchase would make more sense and be better for shareholders, as Karmazin suggests.

Karmazin didn't say he would repurchase shares next year, but Barrington Research analyst James Goss, who maintains an "Outperform" rating on Sirius, believes Karmazin may be ready for such a move next year some time.

Goss noted, "Two year years ago, almost to the day, they were on the brink of bankruptcy. Here we are two years later, and they’ve been able to increase the size of multiple bond offerings based on stronger demand. I can’t recall too many companies going from one extreme to the other this quickly."

Sirius XM closed Tuesday at $1.68, plunging $0.15, or 7.92 percent.