Sirius Reiterates Their Guidance and Growth
May 24, 2006
Despite the assertion by XM Satellite Radio's Hugh Panero that slow subscriber growth is a sector issue, Sirius Satellite Radio reiterated their guidance (which they raised 3 weeks ago by 200,000 subscribers) of 6,200,000 by the end of 2006. David Frear of Sirius satellite Radio reiterated Sirius' guidance at the Morgan Stanley conference today. He further stated that the issues that XM is facing are XM's issues and not Sirius', and that Sirius remained on target for their goals.
XM pointed out a slowing retail channel as a contributing factor to the lowering of their guidance from 9,000,0000 to 8,500,000. It would appear that Sirius disagrees about a slowing retail channel, and the data seems to back up what Sirius is saying.
According to NPD, the retail channel has seen growth of 66% through April 30, 2006 over the same period from a year ago. Sirius has seen 96% of that year over year NPD retail growth, while XM's growth sits at 4%.
Satellite radio is indeed growing. The question is which satellite radio company is seeing the most benefits from the growth. One third of the way through the year, the retail channel has been dominated by Sirius.
SIRIUS SHOULD REITERATE THEIR COMMENTS ABOUT GROWTH AT THE MORGAN STANLEY CONFERENCE IN A PRESS RELEASE.There is no doubt that the sector as a whole has taken a beating so far in 2006. Today's events give Sirius a chance to truly separate themselves from issues that are impacting their competitor.For the first time Sirius satellite Radio has guidance that is above that of XM. Many in the market have perceived XM as the sector leader, but can that "title" be held when Sirius is projecting over 300,000 more subscribers for 2006 than XM?
Is this a point where investors in the sector look at Sirius as a potential sector leader? Looking at the subscriber guidance, and the Cash Flow Break even projections it may begin to turn in that direction. Those that have always believed that Sirius did not deserve a higher market cap than XM, may well begin to reconsider that opinion.
Within the last three weeks there has been a
700,000 subscriber swing in subscriber numbers. Sirius raised by 200,000 and XM has lowered by 500,000. This is substantial, and investors should consider this very closely.
5/24/2006 03:57:00 PM
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