Tuesday, May 01, 2007

Morgan Stanley On Sirius' Q1

May 1, 2007

Morgan Stanley: Net Adds In Line, Pre-Mkt EBITDA Modestly Below

Net adds for SIRI of 556K were in line with our expectations. In particular, other than a slight skew further toward OEM than we had expected, subscriber trends were broadly in line with our expectations.

SIRI reiterated its full year ’07 guidance of more than 8 mm subs and $95 SAC. SIRI 1Q results came in broadly in line with estimates led by slightly better sub growth from OEM which helped to offset continued weak retail growth (gross adds down ~40% YoY) in the quarter.

Retail gross adds were down roughly 40% YoY, we estimate. Beginning in 2Q07, we expect these YoY declines to moderate significantly. SIRI continues to dominate the retail/after-market category from a market-share perspective.