Is WorldSpace Doomed?
Tuesday, November 14, 2006 at 3:16 PM
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WorldSpace recently released their 3Q06 results and quite frankly, they stink. All the key metrics (subs, churn, ARPU, etc) came in lower than expected, and their net loss nearly doubled in the prior-year quarter ($28.9 million vs $15.4 million).
The big news is that WorldSpace has hired UBS to "evaluate strategic partnership alternatives" that "may enhance shareholder value and further the execution of our business plan." Guess what, it's a move that's absolutely necessary. They need to leverage that infrastructure for a serious cash infusion, and do it quick. It can't come soon enough. (Psst, why do you think Gary Parsons resigned from their board?)
Seth Jayson at The Motley Fool seems to think that WorldSpace is doomed. Noting that automobile use is something that WorldSpace simply can't do yet, as indicated in their annual report. They first need to add terrestrial repeaters and a next-gen of receivers able to receive both terrestrial and satellite signal. Hence why those repeaters in Italy were so important.
So one of the key drivers of growth, OEM distribution, is currently out of reach for WorldSpace. And they're burning cash much faster than they can make it. Not to mention the regulatory hurdles with 130 countries to deal with. Not good. Seth poignently ends his article with, "if WorldSpace isn't bankrupt within two years, I'll buy one of those Indian receivers myself."
Can't say I disagree. Here's my verdict:
[Fool.com]
Thanks John!
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Comments
The only hope Worldspace has is to partner with XM and offer world wide coverage and comunications to the US Military. Anyone remember the XM/ Worldspace/ Raytheon demo for the DoD?
Unfourtunatly Worldspace is anything but World Wide coverage excluding the USA.
infact they aparently can not even broadcast to cars. I understand that a car is not a big seller in India but this is bad. Since Worldspace has simmilar Tech to XM they would be a shoe in for Factory installed radios but they dont have repeaters available yet. WTF?
Well, Maybe XM will get a satellite out of the deal once Worldspace goes under.
Posted by: jeff | November 15, 2006 7:21 AM
I can fully understand why Worldspace is in such dire straits. I am a customer. I can't say former customer yet because my refund, that was promised in September, has still not been recieved. In my experience I can attest that Worldspace is great at pushing out their product. I bought into the system in March 2006. Receipt of the proprietary equipment (means that it won't work with anything but a Worldspace subscription) was within two weeks in Italy. Unfortunately, their product doesn't work for what I need it for, automobile reception. My satisfaction was marginal while the unit worked. When it stopped working commpletely I emailed and then had to call customer support. The signal indicated the antannea was not working any longer. They sent another (I recieved it within a week). It didnt' work either. I sent the whole works back to the US and could not even get an acknowledgment that they recieved it. After a month when I inquired the customer service rep emailed that I would get a refund. Still haven't seen it and it's the end of Novemeber. I don't even believe that is worth yet another international telephone call to try and get back even a portion of my $200 investment. I am writing it off as a very, very bad decision. Their customer service department is so out of phase with what a customer expects (a simple response) that I do not choose to waste any more of my time with them and I will gladly tell anyone who asks about my experience with this company. No charge.
Posted by: Jon Belair | November 26, 2006 1:51 PM