Speaking of Sirius’ six million subscribers, Banc of America Securities analyst Jonathan Jacoby writes that “Sirius missed our (and Wall Street’s) year-end subscriber estimate but results were within the company’s lowered guidance range.
Jacoby continues, “Sirius ended ’06 with 6.02 subscribers, below our model of 6.1 million subs (& the Street at 6.2 milllion). This translates into a 21% year-over-year decline. However, year end subscribers were within the company’s previously lowered guidance range of 5.9-6.1 million.”
Additionally, Jacoby writes, “XM probably will fall short of the low-end of its guidance range for year end subscribers of 7.7-7.9 million.”
Jacoby adds that the “overall retail category remains weak. According to our checks, retail demand remained weak in December. Unit sales for the industry were down 39% year-over-year during the first two months of the quarter, and we project retail sales to be off 33% for 4Q overall. We project Sirius to capture 58% of industry retail sales during 4Q.”
The analyst concludes with “investment thoughts: The prospect of disappointing ‘07 subscriber guidance could weigh on both stocks, but the potential for a merger likely provides downside support. (Therefore) we still recommend the XM/Sirius pair.”
