Thursday, October 05, 2006

XM and Hyundai

October 5, 2006

Today William Blair reported that the Hyundai rollout of factory installs of XM Satellite Radio would not be as fast as anticipated.

We at SSG reviewed the issue, and could find no indication that this is the case.

According to what we have learned, Hyundai plans on having 75% of the 2007 model year cars XM equipped as standard equipment, with the balance being brought on next year.

One item of note is that in Q4, we will not see the "impact of the Hyundai program in terms of subscriber numbers. Because of the structure of the deal, XM will not count these installs as subscribers until such time that they are self paying subscribers. The Hyundai vehicles will come with a three month promotion, but there is no revenue tied to that promotion. They same counting method will be employed by XM for Toyota and Nissan. The first quarter of 2007 will show the Hyundai subscribers garnered for the efforts of Q4.

On a side note, it is our understanding that the reasoning behind the 20,000 deduction of subscribers in the "RENTAL CAR" category is that there is a new marketing deal in place. This marketing deal puts XM satellite radios into cars, but no revenue is generated, and thus these are not counted as subscribers. Going forward, such adjustments will not need to be made.

10/05/2006 09:53:00 PM

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