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More Bad Press: Sirius static exhibits no signs of clearing up
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| More Bad Press: Sirius static exhibits no signs of clearing up
- Click HERE to go to the original thread with graphics
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| TheDomina |
By Tom Fredrickson
Published on October 09, 2006
Sirius satellite radio is experiencing severe reception problems with investors.
When the company announced the glad tidings on Wednesday that it had picked up market share, investors dumped the stock, pushing it down 3%, even as the market as a whole soared to a new record. Despite the fact that Sirius' shares now sell for 65% less than they did a year ago, they should be tuned out.
Though it's true that Sirius has gained a bit at the expense of its larger rival, XM Satellite Radio, it added fewer subscribers in the third quarter than it had projected. Among other things, that means that the company will now have a harder time hitting its full-year numbers, especially because fourth-quarter gains are likely to pale in comparison to the figures from the same period last year.
In fourth-quarter 2005, people flocked to sign up in anticipation of Howard Stern, who began broadcasting on Sirius in January.
Sirius is holding to its year-end forecast of 6.3 million subscribers, but analysts are concerned that the number may be optimistic. The company is counting on an even bigger fourth quarter than last year's, when it added 1.14 million subscribers.
That probably won't happen, says Jake Newman, an analyst at CreditSights. Sirius marketed Mr. Stern heavily last year, and the shock jock himself beat the drum for Sirius while still on the FM dial.
But his audience has fallen short, and it now appears that not even Mr. Stern can single-handedly boost the fortunes of a two-company industry that's growing far more slowly than once-giddy investors had anticipated. Even worse, expenses are running ahead of projections.
"We think competition from XM and competing technologies will keep the costs of programming, marketing and acquiring subscribers higher than our previous expectations," Morningstar analyst Michael Corty wrote in a recent report.
Sirius' per-customer acquisition costs are soaring. The company spent $131 per subscriber for marketing in the second quarter of this year, versus $113 in both of the previous quarters, according to adjusted numbers it reported in SEC filings.
That hurts. Though 2006 revenues are forecast to surge 162% from last year, to $625 million, analysts don't expect Sirius to turn a profit until 2010. Meanwhile, they expect this year's loss to increase to 84 cents a share from 62 cents in 2005.
Satellite radios are sold primarily through electronics retailers and automakers--mainly DaimlerChrysler and Ford, which are both suffering from weak sales.
Satellite radio also faces rising competition from Apple's wildly popular iPod and a host of other digital music players that let users program their listening.
Comments? TFredrickson@crain.com |
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| Pussah2 |
| Oh I thought this had to do with the damn acquiring signal I always get :) |
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| Machina70 |
This is a hatchet job by a moron.
"Satellite radio also faces rising competition from Apple's wildly popular iPod and a host of other digital music players that let users program their listening."
Because my ipod completely fills itself with 5 hours of comedy every day......
WTF? |
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| Ruck Studabaker |
Quote: Originally posted by Pussah2
Oh I thought this had to do with the damn acquiring signal I always get :) |
me too |
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| LongShoreman |
Makes sense, how the hell are they going to ens 06' with 6million + subs when they only have 5.1 right now?
How the heck is Mel saying Sirius will be cash positive in 06 when analysts are saying 2010?
The analysts numbers make a lot more sense than Mels. |
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| toobstake |
Quote: Originally posted by TheDomina
By Tom Fredrickson
Published on October 09, 2006
Sirius satellite radio is experiencing severe reception problems with investors.
When the company announced the glad tidings on Wednesday that it had picked up market share, investors dumped the stock, pushing it down 3%, even as the market as a whole soared to a new record. Despite the fact that Sirius' shares now sell for 65% less than they did a year ago, they should be tuned out.
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It's hard to get new customers when you are unable to supply enough radios (last Xmas).
Why spend all the money on advertising? If it works, there aren't enough radios... Seems like a waste of money and a wierd way to run a company.
I'm pullin' for you, Sirius! |
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| boombox |
Quote: Originally posted by LongShoreman
Makes sense, how the hell are they going to ens 06' with 6million + subs when they only have 5.1 right now?
How the heck is Mel saying Sirius will be cash positive in 06 when analysts are saying 2010?
The analysts numbers make a lot more sense than Mels. |
There's a difference between cash-flow positive and being profitable. Mel said they expected to reach cash-flow break even in Q4 2006 or Q1 2007, then cash-flow positive throughout 2007, but profitability will come much later, 2009-2010 cause they've spent about 2 billion so far trying to stay alive and to pay for very expensive satellites, repeaters, advertising, programming and talent. The biggest problem with the satellite radio business is that the losses widen as the number of customers increases due to the very high customer acquisition costs. The key to profitability is to lower the customer acquisition costs. |
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| toobstake |
Quote: Originally posted by boombox
There's a difference between cash-flow positive and being profitable. Mel said they expected to reach cash-flow break even in Q4 2006 or Q1 2007, then cash-flow positive throughout 2007, but profitability will come much later, 2009-2010 cause they've spent about 2 billion so far trying to stay alive and to pay for very expensive satellites, repeaters, advertising, programming and talent. The biggest problem with the satellite radio business is that the losses widen as the number of customers increases due to the very high customer acquisition costs. The key to profitability is to lower the customer acquisition costs. |
True. I'm no CEO but I bet having radios for 'em when they go for thier wallets is a good idea too. |
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