Tuesday, May 01, 2007

Morgan Joseph Calls Sirius' Q1 A "Mixed Quarter"

May 1, 2007

Morgan Joseph: Mixed Quarter; Strong Subscriber Additions, Though Costly; Hold

Sirius puts up mixed results. Revenues and EBITDA of $204.0mm and ($108.3mm) were below our $207.7mm and ($86.1mm) expectations. Revenues grew 61.1% Y/Y. EPS was ($0.10) vs. our ($0.09) estimate. SAC (subscriber acquisition cost) came in at $104.40 vs. our $127.00 estimate and ARPU (average revenue per user) fell 3.1% during the quarter vs. the year-ago period.

We also note that churn was 2.3% (vs. 1.8% a year ago).
Subscriber additions are the quarter's bright spot. The company had very strong subscriber net additions, at 556,490 vs. our 425,000 estimate, to end the quarter with a total of 6.58mm subscribers. While retail remained light (only 192,978 net additions), OEM began to take more of the focus, with the company adding 364,674 net new OEM
subscribers.

OEM announcements highlight growing long-term momentum.

Sirius confidence with merger remains.

Guidance remains unchanged; lowering numbers on higher costs.