RBC analyst comments on XMSR (via Forbes)
No 'Slam Dunk' For XMForbes Market Scan
Mary Crane, 07.05.06, 4:12 PM ET
XM Satellite Radio may not deliver a slam dunk when it reports second-quarter net subscriber results July 6, according to RBC analyst David Bank. Weak retail trends put already-lowered street estimates for second-quarter subscriber additions at risk, the analyst said. The street now expects additions of 420,000 to 440,000 subscribers in the second quarter, versus Bank's estimate of 420,000.
Along with macroeconomic factors like lower consumer discretionary spending, Bank said lower promotional activity and inventory issues related to XM's regulatory problems with some of its new plug-and-play products contributed to second-quarter retail weakness. The satellite radio operate had to suspend shipments of a number of its plug-and-play products in June after the U.S. Federal Communications Commission found their FM modulators, which are used to transmit satellite radio programming over an FM radio frequency, did not meet FCC standards.
Weak retail will also hit XM Satellite Radio 's net additions harder than Sirius Satellite Radio, since XM already has a higher existing subscriber base of 6.5 million, said Bank, who added that Sirius, with 4 million existing subscribers, could gain up to 589,000 subscribers in the second quarter. "XM Satellite Radio needs to have more gross additions than Sirius does in order to achieve the same net addition result," Bank wrote in a note to investors Wednesday.
7/05/2006 05:38:00 PM
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