Tuesday, May 16, 2006

Ford Getting Even More Sirius

May 16, 2006

It looks as if Ford is giving an indication that Sirius penetration may well exceed analysts projections.

Via Forbes.com - Mary Cane

Morgan Stanley analyst Benjamin Swinburne maintained an "overweight" rating and price target of $8 on shares of Sirius Satellite Radio, citing the contribution Ford Motor has made to Sirius' bottom line.

Now that Sirius (nasdaq: SIRI - news - people ) is available as a standard factory installation in Ford (nyse: F - news - people ) vehicles, Swinburne said subscriber additions could reach 9.54 million, versus his previous estimate of 9.14 million.

Morgan Stanley increased its estimate for Sirius penetration of total Ford production in 2007 to 28% from 17%, a figure that could increase further in 2008.

"We remain bullish on the long-term model for satellite radio," Swinburne said, forecasting positive free cash flow estimates in 2008, after Sirius reaches 12.3 million subscribers by the end of 2007.

Swinburne added that this forecast could be conservative and that free cash flow estimates could be positive as early as the second half of 2007.

While Sirius has reached parity on marketing efficiency with its major competitor, XM Satellite Radio (nasdaq: XMSR - news - people ), Swinburne said marginal subscriber economics remain attractive for both satellite radio operators and year-over-year operating trends should improve for XM and Sirius in the second half of 2006.

5/16/2006 02:31:00 PM

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