Live Blogging XMSR 3Q07 Earnings Call

10:06am: Joe Titlebaum does his "forward looking statements" opening disclosure.

10:07am: On to Nate Davis. Intros Eric Logic, Joe Eutennauer, and Gary Parsons (I know, I can't spell... will correct later so I don't offend anyone :) ). Davis says that even tho the merger is getting a lot of press, says that XM is still dedicated to driving the growth of the company.

10:08am: Davis says that while he's "disappointed" with retail growth (he should be), there are point of growth that are very positive. OEM growth: 3Q growth was record numbers.

10:09am: 900,000 OEMs with XM installed for Q3

10:10am: Conversion rate remains stable even as volumes increases - 52.5% for 3Q

10:12am: Two U.S. based call centers soley dedicated for OEM calls, and made the online activation better. For the 2008 model year: GM will build 2.5 million cars with XM installed (roughly 70% penetration rate). Now talking about the Bob Dylan/Cadillac ads.

10:13am: Toyota will do more with NavTraffic and XM and even more going into 2008. Honda is kicking off a campaign in November. Hyundai is doing a promotion soon as well. Infiinity has extended the QX56 promotion because it has been so successful. Co-branded "integrated" marketing campaigns continue to give results.

10:15am: Retail gross adds down 22% from last year. NPD indicated an industry-wide drop of 30%. But their own gross ads are down less than what NPD reports because of direct retail sales.

10:16am: "Competition is contributing to overall slower growth in the satellite radio category." Expect significant retail net ads for Q4.

10:17am: Talking about the Xpress brand - wide range of options for mulitple types of buyers. Now talkiung about the XpressR and XpressRC

10:18am: Churn/Listener Care. Self-paying churn is down for the 8th consecutive quarter in a row. Expect churn to remain around the current levels.

10:19am: Now to E-Lo. Talking about XM's programming. Highlights XMX which features XM's exclusive music (one of my personal favorite channels now).

10:21am: Logan is now talking about XM's coverage of baseball. Gave some figures that I missed, but they sound WAY higher than what Arbitron has reported. I wonder exactly how off Arb's numbers really are?

10:22am: Talking about POTUS and how it has gotten a lot of press lately. 6 presidental candidates have been interviewed so far.

10:23am: Now to Joe Eutennauer for the financials.

10:25am: Less than $500,000 were for lobbying expenses.

10:27am: Increase of CPGA to $116 is largely attributable to increases OEM expenses (~$10), decrease in retail sales, and lower-than-normal marketing that was done in 3Q06.

10:29am: 2007 Guidance Update - "expect seasonal fluctuations" - expect overall grossnet subs to increase in 4Q versus 3Q due to holiday season. ARPU will decrease due to increased load on call centers, and SAC/CPGA will increase due to marketing expenses. Maintaining the same subs and revenue guidance. CPGA guidance IS being modified. CPGA will exceed guidance from $111-114 "into the high teens"

10:32am: Now to Gary Parsons for the merger update. Gary is being a good boss and is complimenting the Nate, Eric, and Joe.

10:33am: Support for the Sirius-XM continues to come in. 5,000 comments filed. Support for the merger is 4-1.

10:34am: Talking about the groups who have voiced support. Says that the groups "undercuts" the NAB's opposition.

10:35am: "Weekly" announcements of competiting audio entertainment systems are coming out.

10:36am: Continue to go forward with the DOJ/FCC process. Feel as confident today "as ever" - continue to go forward with the 2007 plan.

10:37am: Opening up the lines for Q&A

10:39am: Q: Jacoby - You guys have signed contract extensions which is all great news. Is any of that impacting SAC/CPGA or revshare as we go forward? Merger side: there a little bit of negative backlash for the fasttracking of media ownership rules, is there any reason to think things will slow down as a result?

A: OEM extensions won't impact SAC/CPGA directly. There will be an initial ramp up in SAC/CPGA before the subs become self-paying. Media ownership isn't directly related to Sirius-XM merger. It's a docket that has been opened up long before the merger. Clearly there is SOME relationship there, but the media ownership is a much broader issue.

10:44am: Q: Bob Peck - (Kunal is subing for him) - ad expenses are up yoy, yet aftermarket gross ads are down. Yet Sirius has beaten out XM for retail marketshare. WHat will jumpstart retail growth?
A: Nate says that some of it is seasonal, since MLB is in the beginning of the year, NFL at the end of the year. Also says that product development is a driver of retail sales. Gary says that marketing has been concentrating more on OEM lately because that's the key driver.

Kunal follows up with a question comparing Sirius' OEM marketing with XM's OEM marketing and the experimentation in various pricing choices. Gary responded that they would rather not move to a 1-year or longer trial period since conversion rate is doing great at 3-months.

10:48am: Q: OEM churn versus Aftermarket churn? Family plan churn?
A: OEM churn is less that aftermarket because its a fully integrated experience but retail radios can get outdated and less integrated. Family plan tend to churn less than regular.

10:50am: Q: Update on the status of the CRB rulings?
A: Our case is in and largely completed. Not much to update, but still expect it to be done by EOY.Not much else on that

10:51am: Q: David Bank (aka "the man") - Some insight on the "paid trial" OEMs, how many of them?
A: Our stats are still early on the "paid trial" oems (like Hyundai). In 1Q08 there will be some sort of statistic that gives info on this - not broken out by manufacturer. Says that early numbers and conversion rate are comparable to current rates. As for the actual number that are not being reported on - 900k are being shipped to dealers, but add a couple hundred thousand for those that have gone off to customers (I'm not sure if I wrote that correctly? - need to listne to the replay).

10:56am: Q: Eileen - What makes you think that the conversion rate will stay the same?
A: As we look at data from other manufacturers, we talk to them and about programs that we can put into place (mentions QX56 promo again). We look at the practices that give us a 70% conv rate, and try to apply them to the ones that are getting 30%. They track and adjust. Also do "early contact programs" like a welcome call and other direct contact initiatives. Gary wants to highlight that XM has "years of experience" with GM, Honda, etc. GM particularly spans the gamut of high-end and low-end vehicles. Manufacturers don't go standard equipment without having a high level of confidence with the program. Mentions that Chevy Cobalt is not standard. Nate highlights the level of integration now. Take a look at the quality of an install from years a go, and to the quality of the install now...

10:59am: Q: For the 4Q, should we expect the deferred revenue at the end of the year or would OEM deflect that impact?
A: No, you should still expect the deferred revenue to still impact, but yes, OEM revenue will deflect a bit of that revenue. Good catch in your modeling.

END OF CALL.
(I need some coffee)