JP Morgan Report on Satellite Radio
July 19, 2006
Satellite Standard Group keeps you informed.
Today analyst Barton Crockett of JP Morgan has released a report on the satellite radio sector with their Q2 preview.
In the report they indicate that Sirius may fare better than rival XM, and they see sme key factors are as follows:
1. Year End Subscriber Targets (JPM sees more risk to XM in this category)
According to Crockett, they feel that XM's current target of 8.5 million subscribers is to high. JPM has their target at 8.36 million. They feel that Sirius' current guidance of 6.2 million is low, but that it is getting harder for Sirius to be able to raise subscriber guidance. JPM currently estimates that Sirius will finish 2006 with 6.3 million subscribers.
2. Churn Deactivations (JPM sees more risk to XM)
Crockett projects XM's total churn will rise to 2.7% in Q2 (up from 2.3% in Q1). They also project a rise in Core Churn (the percentage that XM reports) from 1.6% in Q1 to 1.7% in Q2. For Sirius they project a flat churn rate of 1.8% due in part to longer OEM promotional periods.
3. Retail and OEM Splits
JPM has made an assumption that due to strong DCX and Ford ramp-ups that more than half of the Q2 Net additions came from the OEM channel (331,000 OEM and 269,000 Retail). He indicates that if the OEM is actually lower than he projects that it would bode well for Sirius' retail share and reflect poorly on XM's gross retail numbers.
JP Morgan maintains a neutral rating for both Sirius and XM. Their report 20 pages long. SSG readers can obtain more information by going to the JP Morgan website
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