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July Satellite Radio Retail Sales Down but Better Than Expected

by: Tyler Savery August 26, 2008 | about stocks: SIRI    

Tyler Savery

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Retail sales for satellite radio in July were still down on a year over year basis, but overall sales were better than most analysts were expecting. While Sirius and XM have now merged, the breakdown from NPD Group still outlines retail sales by brand. For July Sirius (SIRI) has virtually closed the retail gap, being down only 1% on a year over year basis. XM’s July was not very good, with the XM brand coming in at down 52% when compared to sales in 2007. Combined, the numbers fare much better with the sector being down 14%. Many analysts have been expecting a 30% drop in the retail channel. Stifel analyst Kit Spring is expecting a 25% drop in retail for Q3 2008, and carries a $3 price target on SIRI. The retail split was 70% for Sirius and 30% for XM.

While many feel that retail is not a major factor in SDARS, that sentiment will soon change. With A-La-Carte radios set to debut soon, the retail channel could pick back up, although the early adopters will likely be existing subscribers upgrading their receivers.

As the year continues to progress, and new receivers become available, the retail channel will be interesting to watch.

Position - Long SIRI

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This article has 21 comments:

  •  
    Aug 26 12:50 AM
    Tough to be a SIRI long... The shorts are all over this one due to the huge converts outstanding. I've seen this many times as the bond holders get a free ride to the down side. It is a vicious cycle since as soon as they are in the black, these shorts start shorting with impunity hoping to push the company into bankruptcy. As the stock goes lower and lower, it makes it next to impossible to refinance the debt.

    Anyway, good luck with your long position. But, I don't think SIRI will trade on fundamentals until and if it can refinance those converts to more attractive financing. Chances are SIRI will go bankrupt wiping out the common and then re-emerge as a new company with new shareholders to take advantage of the long term fundamentals in the business.
    Reply
  •  
    Aug 26 01:40 AM
    How "many" times have you seen this happen? How "many" of thies convertable bond holders have shorted a stock to bankruptcy even though the fundamentals are strong. If you have seen this, you had better cite some examples, because you are full of it. The company would be bought out before that happened, or the converts would be paid off with a stock issuance, which, while not good for the stock price, is a much better option than bankruptcy if the company is performing well but the stock price is not reflecting it because of shorting. Your statements, ktwalrus, make no sense.
    Reply
  •  
    Aug 26 06:10 AM
    ktwalrus, what are you smoking? This company will not go bankrupt simply because of all the revenue they make on a monthly basis. And that number is still in its infancy. If they didn't go bankrupt when they were jousting with XM for years, what makes you think that they will go belly-up now that they are alone? There are a few scenarios where Mel can take some shares off the market or get refi even before January. We'll have to see what he has in store for us with the post labor day conference call.

    And I hope he can do something great because I own 100 Jan 2.50 calls which I bought at 15 CENTS. Thats 100 contracts, not shares.
    Reply
  •  
    Aug 26 06:14 AM
    One thing that DOES have me perplexed is that Siri XM is not marketing the NFL when it's right around the corner. Can anyone chime in on this? Tyler, what is your take on this. Are they waiting til the last minute?
    Reply
  •  
    Aug 26 07:40 AM
    how it jumps Market Cap from 2B to 4B by night?
    Reply
  •  
    Aug 26 08:14 AM
    Tyler, I can't fathom not going after the used car market. The radios are already there. No investment on hardware for the consumer or the Sat. providers part. It takes about 5 minutes to activate via phone & credit card.
    How many previous owned vehicles w/sat radio are out there? I'd love to know that number. How many million? Go after that market via TV or FM, give an incentive. It has to be a no brainer. (can you give us the number of used cars w/ sat radios?)
    Reply
  •  
    Aug 26 09:19 AM
    As a long time XM subscriber, I feel they focus too much on factory install in cars, both old and new. I've gone into retail stores recently and in the past and the satelite radio section has never been an important section. I have a family member that works at Best Buy and asked me, "what is XM anyway?". Sirius XM needs to focus on their portable players in retail stores to get the company on track. A lot of people feel 12.95 for radio in my car? Not worth it. They may say I only drive an hour a day or so. If they have a retail portable unit, they can use it in car, at home, working out, walking to the store, etc. Sirius XM needs to start to compete with the IPOD and not be only an in car radio service. A major campaign should be placed in the BestBuys, Circuit City, etc...Commercials comparing satelite to Mp3 players need to be made and ran a lot!!! And they need to launch new portable players that look "sexy" in retail stores. There is a younger market, Teens to people in early 20's that hasnt been tapped into yet. Bottom line, rebrand the company away from the early years of this millenium, when it could only be installed in cars.
    Reply
  •  
    Aug 26 09:23 AM
    Who can save SIRI, when will the price go up?
    Reply
  •  
    Aug 26 09:56 AM
    So it appears that the FCC got away with there disgraceful act of draging this company through the mud. No inquirys or anything! FU FCC.
    Reply
  •  
    Aug 26 10:21 AM
    ktwalrus is Cramer. The used car market is huge. They will start pushing it. Siri has been pushing the NFL. Best Buy and Circuit City employees are not the most knowledgeable or helpful people. That I hope will change. Give it time. These companies just merged. The synergies are huge.
    Reply
  •  
    Aug 26 10:23 AM
    Thankyou Tyler for keeping holders of Sirius/XM informed The comments to your articles seem to express either optomisim or pessemism. I am one of the optomists regarding the future of satalite radio. We should hear much more from CEO Mel after labor day and going into the new year 2009. I don't think Mel will let the common stockholders remain frustrated. Based on his record he was always working towards the benefit of the company and its stock holders.
    Reply
  •  
    Aug 26 11:22 AM
    DEAD MONEY
    Reply
  •  
    Aug 26 01:12 PM
    What I can't figure is why they haven't announced when the channels will merge. I am waiting to buy a portable sat radio to hear my Pats after I move south in a month - buying a Siri radio is a lot cheaper than buying DirectTV to get my NFL/MLB/NBA games.
    Reply
  •  
    Aug 26 01:12 PM
    Tyler, thanks for the consistency in articles about SIRI XM. I log on everyday to see what's up with SIRI XM and it's nice to see an informative article just about every day. Not to mention I love reading the comments on these articles. I still have faith in SIRI XM and its nice to see there are a few others out there as well :)
    Reply
  •  
    Aug 26 01:14 PM
    What I can't figure is why they haven't announced the date the two will merge content - I have been waiting to buy but won't until I know where the NFL/MLB/NBA will be - since I am moving south I want my NE Pats and sat radio is cheaper than DirectTV or buying beers at the local sports bar.
    Reply
  •  
    Aug 26 01:38 PM
    Only God can help stop falling!
    Reply
  •  
    Aug 26 06:03 PM
    I agree with most of you here especially Tyler. The used car market is huge and I repeat huge, This is the icying on the cake. I know and some of you agree, all models of MBenz , BMW, Jaguar, Porsce, all new Cadillac, going back at least 2 1/2 to 3 year are equipped with satellite radios, and at least 50-60 % of Honda, Toyota, Nissan as well. most if not all of these brands are leased max for 36 months. Guess what people, a big number of these cars have been returned or are returning to dealers , either for re-sale or for new leases. I do not know the exact figures of how many cars are released or re-sold after a lease termination but I suspect the number is 4-5 million.

    Tyler in another recent article had mentioned that dealers should include the price of the satellite radio subscription into the price of the car, I agree 100% with this Idea, and should be done with the used cars for a year or two.

    The used car penetration is an extra bonus, but not many if any analysts talk about, IMO the potential is huge.
    Reply
  •  
    Aug 26 07:38 PM
    God does not care about the price of Siri, nor the price of gas !!!
    Why would he?
    Reply
  •  
    Aug 26 09:08 PM
    Sirius is doing a lot to get the word out about NFL. I saw an article in ESPN the magazine about how you can get all the sports now on one package. Heres the kicker. And the informed people on here will understand what I mean. They actually bothered to mention they were in huge debt. Talk about a blatant attempt to focus smart people away from this stock. Manipulation of that level means they DONT want you to buy it. Not that they want you to sell it. If they could have gotten this stock to .01 cent , they would have. They cant get it any lower, its already ridiculous enough. If Sirius didnt work with the banks to keep the price down...waiting to release reports, downplaying specifics, etc... then it would be hard to keep down. When enough shares have transferred hands, they will allow it to go up. Probably gap up past a ton of buy triggers.
    Reply
  •  
    Aug 26 11:31 PM
    Why does "OEM" get limited in news accounts and blog threads to makers of wheeled vehicles? This is SatRad with tremendous remote reach (underlined, italicized, bold faced, 48-point type). What about watercraft? What is the total maritime SatRad market? What about the general aviation markets? Okay, fewer watercraft and aircraft combined, probably, but still significant markets. And what about Sirius XM's brain trust partnering internationally to extend the service to the Euro zone and elsewhere? Okay I'm done for now ... except: What is happening to the stock is reprehensible. Sirius XM is working its plan and has tremendous potential. It deserves better. Boom or bust, long SIRI.
    Reply
  •  
    Aug 27 12:00 AM
    This topic is interesting to me. I have posted earlier about how Siruis XM should not focus on new and used car sales as much as they do on retail. The sales they get from new car sales are what I think are "hope" sales. Meaning, someone just bought a BMW or some new car, lets have satelite pre-installed let them try it out for free possibley and then they will become a long term subscriber. The technology has been around for too long to still be in this stage. People shouldn't have to be given a "add- on" to try satelite. It should be established as something people are willing to make an effort to get and want to have. If you have to buy a car to try satelite radio, the service is not attracting the attention it deserves. Really, you dont have to buy a new or used car to get satelite, you can get a radio in your vehicle for easily under $100.00. I drive a 1995 Buick and have satelite. My car was out of service for a few days and I got a rent a car. I had my satelite installed in that car in 5 minutes! You dont need to buy a new Mercedes to get satelite anymore. You can take the bus or ride a bike and still get the service. As long as the company relies on this strategy of selling to car buyers by giving them a sample, they will struggle. Does Apple Ipod need to wait for someone to buy a 50,000 car before they get a ipod for thier car?No, people want it so they go to thier retail store and buy it, not go buy a car with an ipod jack and wonder how the dealer can install it. Sirius XM must become a wanted service rather than a "try and buy" service!
    Reply
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