Friday, February 23, 2007

Amtech Previews XMSR & SIRI Earnings

Amtech previews next week's XMSR & SIRI earnings
via www.briefing.com, Feb 23

Amtech notes that both satellite radio providers will report next week with XMSR on Monday and SIRI on Tuesday, both before the market open. With lower than expected subscriber numbers already reported by both companies, firm thinks the focus will be P&L trends and subscriber growth guidance. They expect lower losses for both companies as a result of lower subscriber additions. They say the general feeling is that the merger announcement the week before earnings reports is probably not a signal of improving business fundamentals and guidance is likely not great. Expectations for subscriber guidance have come down with SIRI missing Q4 by 300k and XMSR missing by 200k against earlier forecasts. Firm thinks slowing retail subscriber growth is expected to be offset in part by a pick-up in OEM business with the 2007 car model year, with another leg up in 2H with 2008 model introductions. They think consensus for 2007 is around 2.1 mln net new subscribers for SIRI and around 1.5 mln for XMSR. With the merger proposal, SIRI becomes the valuation driver for both stocks. Barring a material surprise in either direction, they believe the XMSR report is more likely a non-event and SIRI may have more stock relevance. They note the binary outcome on merger approval/rejection is however a more important event for the stocks than earnings or guidance from either company.