JP Morgan on XM Programming Conference
June 6, 2006
Satellite Standard Group keeps you informed. Today JP Morgan issued a report regarding the XM Satellite Radio Programming Conference. JP Morgan maintains a neutral rating on XM Satellite Radio.
Excerpts from the report:
"XM execs elaborated on their 2Q challenges and longer-term expectations during the XM programming day Mon. in Wash DC. However, we walked away seeing some risk to the full yr 8.5m year end sub guidance, as it presumes a strong 4Q06.""We believe a miss vs the 8.5m sub goal could constrain XM shares, while slowing 4Q retail sales and an XM miss could cap Sirius shares. We retain our Neutral ratings on both stocks.""XM execs have cited three reasons for 2Q weakness:1) Delays in shipping new wearables, which in turn prompted XM to "go dark" and
hold back on launching a new advertising campaign featuring the new wearables.
That campaign is only now beginning to ramp up;2) Delays in shipping other devices to retailers due to need to fix embedded FM
transmitters to comply with FCC interference rules;
3) “Macro-economic factors” prompting a slow-down in satellite radio industry sales (an assertion Sirius disputes) and, XM execs argue, a slow down in growth for other devices such as MP3 players."It would appear that there are still some questions at retail for XM satellite Radio, and a miss of potential sales for the Father's day period makes the guidance highly weighted towards the fourth quarter. XM did cite that weekly NPD numbers are showing XM getting closer to Sirius, but investors should be aware that Radio Shack (a top seller of Sirius) is not counted in the weekly data.SSG readers can visit JP Morgan
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