2Q07 Preview: SIRI, XMSR subscriber estimates
Friday, July 20, 2007 at 10:36 AM
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Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) are scheduled to release their 2Q results within the next two weeks, and analysts are offering up their predictions of what's to come.
And the news ain't that bad. (surprised?)
Bear Stearns analyst Robert Peck projects that Sirius will add 920,000 gross subscribers, while net subscriber additions will come in at 477,000. For XM, Bear Stearns projects gross additions of 950,000 and net additions of 323,000 subscribers.
Bank of America's Jonathan Jacoby is a bit more bullish on subscriber additions, stating that Sirius "will easily top" BofA's estimates of 441,000 net subscriber additions, "and could beat the Street consensus estimate of 470K by as much as 25K." Jacoby also estimates that XM will also "easily top" the Street consensus of 310k net subscribers, and may even best his more aggressive estimate of 345,000 net subscribers.
The comps are hard though. For the same period last year, XM came in at 398,012 net subscribers (926,281 gross subs) and Sirius topped the scale at 600,460 net subscribers (830,571 gross subs).
Even if XM and Sirius beat out the more bullish estimates, they still likely won't beat 2Q06's numbers... albeit by a relatively small amount. But with the merger on everyone's minds, will it even matter?
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Comments
The churn numbers implied by the estimates are interesting (fully-loaded), of course.
Bear Stearns
SIRI - 443k deactivations, average sub level of c. 6.8M, 2.2% churn
XMSR - 627k deactivations, average sub level of c. 8.1M, 2.6% churn
Peck sees an uptick in fully-loaded churn for XM from 2.5% last quarter to 2.6% this quarter. Either he's baking in a lower conversion rate, or he's baking in a higher self-pay churn rate.
SIRI's churn rate meanwhile sees a decrease from 2.3% to 2.2%.
In both cases the churn trend of the past few quarters (Sirius rising, XM falling) reverses. I suspect that some of Sirius' downtick is due to a lot of those 1-year retail subs expiring in Q4 and Q1, and thus not churning out in Q2 or Q3.
XM's increase is harder to pin. There wasn't been much evidence of more XM-equipped cars from Honda and GM rolling off the lots in Q1 than in Q406 (which is when they'd be rolling off if they were being deactivated at the end of a promo period in Q2). The conversion rate could have dipped again, which, barring an increase in Honda/GM install rate (the churn rate has tended to increase as the install rate increased, due to more car buyers who have no interest in using their factory XM being handed promo subs), is troubling. Alternatively self-paying churn could have increased; perhaps more than 5 thousand subs cancelled XM over O&A (XM, IIRC, only said that 5k "people" cancelled over O&A; it seems reasonable to me to say that the type of person that cancelled was someone who's a bigger fan of O&A than most of their listeners, and thus somebody who is probably more of an XM true-believer (or was, pre-suspension); that type of individual, it seems to me, would be likely to multiple radios, so it could be that more than 5k subs cancelled while only 5k people cancelled).
Posted by: leviramsey ? | July 20, 2007 12:10 PM
they claim XM churn up? your right.. thats tough to pin down with Sirius churn down... given the Chrysler installs jumpung up in september 2 years ago.. those OEM's after waiting to be sold then 1 year free then 1 month grace period.. would put the churn hitting in Q2.
It will be interesting to se the full numbers Gross and Net for Retail and OEM
I am thinking XM's retail will be a negative net ofset by some decent OEM numbers.
I also think the 310,000 consensus is too high for XM. Could be wrong though. they did claim to be over 8 mill at the time of the Q1 CC. .. although that puts them at just about 300,000 net adds for Q2 on average. Who knows anymore... maybe I am too close to see things clearly.
Posted by: jeff | July 20, 2007 2:17 PM