Skip to comments.Sirius Shares Fall 7% On Lower Subs Forecast(Sirius/XM merger?)
Posted on 12/05/2006 4:06:58 PM PST by MovementConservative
Shares of Sirius Satellite Radio fell more than 7%, or 30 cents, to $3.89 a share in the first 30 minutes of trading Tuesday morning (Dec. 5) after the satcaster cut its year-end subscriber forecast by 200,000 to 6.1 million. Shares of SIRI hit a low of $3.75 at 9:48 a.m. before beginning a slight rebound.
After the stock market closed Monday evening (Dec. 4), Sirius CEO Mel Karmazin issued a statement noting that sales of satellite receivers since the Thanksgiving weekend have not been at the pace we had anticipated. We are updating our year-end 2006 subscriber guidance to between 5.9 million and 6.1 million.
The move by Sirius reverberated on Wall Street as analysts began slashing their ratings on the satcaster, sparking a new wave of predictions that Sirius would have to merge with its rival, XM Satellite Radio, to survive.
I have to tell you, I thought that without a merger with XM, these two companies might not create a lot of wealth in the next few years, wrote Wall Street gadfly Jim Cramer in his RealMoney.com column posted this morning on TheStreet.com. Mel convinced me I was wrong," he continued. I wasn't. I blew it. I should have stuck to my guns. I feel embarrassed. And I don't like it, bemoaned Cramer, who also hosts CNBCs Mad Money. Mel had been money in the bank. Everyone deserves one strike. But in my league, two strikes and you're out.
Even a half-strike more and you're out in this satellite game, Cramer continued. If Mel hits the low end of the range or doesn't hit it at all -- both entirely possible if sales don't pick up in the next two weeks -- this one's done for, without a merger.
Bear Stearns satellite analyst Robert Peck cut his rating on Sirius to underperform, noting a weak retail environment and the fact that Sirius is losing ground to XM in the race to have new car manufacturers insert its receivers in new cars. Morgan Josephs David Kestenbaum, meanwhile, slashed his rating on Sirius to hold.
Sirius has an excellent selection of programming, and still has momentum even with this temporary blip. Two years ago, people would say, Sirius WHO? Not anymore. My money is on Sirius, figuratively and literally (for the long term as a stockholder). Time will tell in another few years how this all shakes out. Meanwhile, every store I've been to electronics wise has tons of XM equipment, but very little if any Sirius equipment (which is an indicator of its much higher demand over its rival).
I'm afraid Howard and Mel have your $ now. Sirius stock may not be worth the paper it's written on after the holidays. If they aren't able to get in the new car market, stick a fork in that company and kiss your investment goodbye.
Roger that. I have a long commute and even though I get NYC radio most of the time, it's aweful and constant commercials. I really enjoy Lucy/Squizz/Top Tracks/80s and of course, the virus. Heavy traffic doesn't suck as bad as it used to :).
Some are worse than others - the play list on "Pure Jazz" seems to less than 100 tunes deep - I mean, HOW HARD could it be to add another 500?
I never really had the time to get used to it. My trips are usually short and I like to catch the local news. By the time I figure out what I want to listen to on Sirius, I've arrived where I'm going. Glad it works out for you
Both dicey of course.
To avoid the annoying ads?
Uh, hold on there... unlike the satellite boom of the past few years, retailers have wised up and heavily stock the units that SELL. I'll admit that I am an XM subscriber for the past 3+ years, and can attest that XM's hardware is vastly superior to those carrying Sirius' label.
Mel can pontificate all he wants of his product, but when he spends it on an air bag named Stern, he needs to clean the slime off of his crystal ball.
Only if they're truly convinced that one or both companies was utterly doomed to go under without it (and neither company is anywhere close to that point, despite the wolf cries of this article). They smacked down the proposed Dish Network - DirecTV merger in record time.
they have an all Traditional/Clasic Christmas Carrol program on 107 and 108 is all "Grandma was run over by a reindeer" kind of songs.
This is one of those rare reversals of the old BetaMax versus VHS issue. In this case, the superior technology... XM's stationary satellites and more extensive repeater network... is apparently winning.
Nobody's forced to use satellites to listen to radio, and the free broadcasting competition will keep prices down, so having just one supplier probably won't make much difference.
The better programming helps too.
Are Bob and Tom on satellite radio?
just a tidbit of info here...I read an article in Wired magazine and although I forget WHICH of the two satelite radio stations it was, actually went out of their way to HIRE the effing moron who KILLED FM radio programming (in the late 70's) to do the programming on satelite radio.
"I'll admit that I am an XM subscriber for the past 3+ years, and can attest that XM's hardware is vastly superior to those carrying Sirius' label."
An anecdotal story I have to refute this is claim comes from a co-worker of mine who bought an XM radio receiver for his car, and the unit was constantly picking up transient noise as well as constantly cycling from the alternator in his car. He was an electrical engineer, and eventually he gave the unit away as it could not be fixed.
He did buy another XM radio receiver from a different manufacturer thought which did not have this problem.
My Sirius installation in my vehicle was seamless and without incident. I detect no external noise, no transients and no 'hiss' (as would be the case if I was to turn up the volume to its fullest position on a system with appreciable additional noise).
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