Forbes Weighs in on Bear Sterns Comments
June 13, 2006
Forbes Market Scan
XM Faces 'Anemic Demand'
Kate DuBose Tomassi, 06.13.06, 12:31 PM ET
Citing "anemic demand" in April and May for XM Satellite Radio, coupled with product delays and shortages, Bear Stearns Equity Research analyst Robert Peck reduced second-quarter 2006 net subscriber additions estimates on the satellite broadcaster.
In a report Tuesday, the analyst estimated 395,000 net subscriber additions in the quarter, down from 450,000 previously. He added that he expects advertising spending to be down significantly during the quarter as well.
The impact is likely to be felt in the third quarter as well as the shortages continue, said Peck.
In addition, the third quarter is typically seasonally strong for rival Sirius Satellite Radio because of the National Football League season, and this year Sirius will likely be promoting a new unit, called the "Stiletto," he added.
"We believe that the negative sentiment around the stock likely will continue in the near-to-mid term," the analyst said. But the analyst says he remains positive on the industry longer term, and believes the market can accommodate both XM and Sirius. "As XM resolves issues, we think there is significant scope for appreciation even though it may take some time and be subject to significant amount of volatility," he said.
Bear Stearns rates XM at "underperform." The firm rates Sirius at "outperform."
6/13/2006 02:06:00 PM
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