Analysts weigh in on XM-4 sale/leaseback
Thursday, February 15, 2007 at 10:09 AM
Tags: 2, XM
Analysts seem split over XM's decision to sell and leaseback XM-4 in an effort to add some coin to the bank.
Bank of America analysts Jonathan Jacoby said XM is now funded until the second half of 2008, when they're expected to turn a profit. On the otherhand, Morgan Stanley analyst Benjamin Swinburne was "mixed" on the deal, saying that this could show XM's opinions about future cash flow as well as on price increases.
"We believe this transaction also likely speaks to management's view on raising prices in 2007," Swinburne said. "We believe Sirius will move to raise rates in 2007, but that XM is less inclined to follow suit."
[Forbes]
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"We believe this transaction also likely speaks to management's view on raising prices in 2007," Swinburne said. "We believe Sirius will move to raise rates in 2007, but that XM is less inclined to follow suit."
Do they mean subscriber rate hikes? What to $15.00 or higher a month? I hope that's not what they are talking about.
Posted by: prozac ? | February 15, 2007 10:28 AM
I still think that charging $10 a month was one of the biggest reasons XM used to outsell Sirius. Since the rates increased, there has been speculation every so often that Sirius would be raising up to $15/mo. to improve cash flow, but all rumors have been unfounded thus far.
I feel as though XM has been waiting for the price change so that they can once again be the cheaper service. I dont see XM charging more than Sirius ever. The same amount is reasonable, but not more.
Posted by: MarkS ? | February 15, 2007 11:37 AM
There is more than speculation, Mel has flat out said that Sirius is planning to raise rates (i.e. your bill). But when? Nobody knows. (But to be fair he also said that video would be coming in 2004, 2005, etc.)
XM will not raise rates for quite awhile after Sirius, but I agree with MarkS that XM will not charge the same or more than Sirius ever again.
Posted by: History Guy ? | February 15, 2007 11:43 AM
Sirius must raise rates to pay for their expensive content. XM with much lower priced content does not have to raise rates.
When Sirius raises rates to $14.99 this year that will balance out retail to 50/50 again.
Posted by: Matt | February 15, 2007 12:42 PM
Eh. You're all giving XM management way too much credit. They're just not that creative. They're the reason a 5 to 1 subscriber advantage is about to be trumped. All they had to do was sign Stern and Sirius would be bankrupt by now.
I guarantee if one raises rates, the other will follow suit within a short time.
Posted by: MikeHunt ? | February 15, 2007 1:00 PM
"Mel has flat out said that Sirius is planning to raise rates (i.e. your bill). But when? Nobody knows. (But to be fair he also said that video would be coming in 2004, 2005, etc.)"
Mel said that, WOW. Video in '04, hummmm. I wonder when he got the job at Sirius, I thought it was Nov '04, it sure was dumb to say that it would be out in only one month. I would sure like A link to see for sure Mel that "Video would be out in '04."
Posted by: Tom C. ? | February 15, 2007 10:29 PM
MikeHunt,
If XM had signed Stern they be bankrupt also and there would be no sat radio at all. Their management had the foresight to not overpay and tie their entire business to one entity.
Posted by: PFreak ? | February 16, 2007 3:00 PM