For the fifth month in a row, year-over-year retail sales are on the downslide (if you're keeping track -- August: -3%; September: -12%; October: -25%; November: -45%) to a whopping 46% decline in year-over-year unit sales for December 2006.

The Quick Glance:

• Sirius December 2006 Retail Sales:
  Down 40% YoY
• XM December 2006 Retail Sales:
  Down 55% YoY

Marketshare:

• Sirius Dec '06 Retail Marketshare: 66%
• XM Dec '06 Retail Marketshare: 34%

The obvious big news here is that XM gave up such a massive amount of retail marketshare to Sirius in December. Sirius definitely executed better in retail (as obvious with their impressive Q4 net subscriber additions as well), but it's still a bit surprising to see XM's retail marketshare down so severely.

Yes, Sirius had a larger number of discounted receivers available during the holiday season than XM, but I think their continued brand exposure (thanks to Stern) probably played a roll in their retail dominance as well. I'd be curious to see if there was any financial downside to get this result though. Regardless, now is a time for Sirius peeps to celebrate, they did a bang-up job last month.

According to theflyonthewall.com, XM and Sirius are expected to make an announcement at the North American International Auto Show in Detroit - today 01/11/2007.

Bank of America analyst Jonathan Jacoby met with XM Management at CES earlier this week, and it is his view that XM is considering the merger option quite seriously. Citigroup analyst Eileen Furukawa after an investor dinner with Gary Parsons also noted a she "sensed an increased openness from XM re: the possibility of merger with Sirius."

Now mind you, there's a big difference between these two companies wanting a merger, and whether it will really happen (see my 5 reasons why it won't happen post). There's many hurdles along the way, especially the "balance of power" between the two companies in this newly formed entity, but this is a clear shift in XM's previous position on the merger itself.

From an investor's standpoint: Bear Stearn analyst Robert Peck said it perfectly in a recent note, "the possibility of a merger has likely been the single most important factor impacting valuations recently."

From a customer's standpoint: is this really the best thing? Who knows, but at this point it's way to early to even consider the implications of a merger actually going through.

The folks over at SSG were kind enough to provide the data of both quarterly and total net subscribers between both Sirius and XM. Using this data, below is a visual look at the year in net subscribers.

2006 Quarterly Net Subscriber Additions: 

The scary part: in terms of net subscriber additions, XM actually performed better in the first quarter of 2006, than in the fourth quarter of 2006. Of course this may not be the case in terms of gross subscribers (read more here) but it's still concerning to say the least.

2006 Total Net Subscribers:
 

Sirius now is nearly at the same point in total subscribers as XM was a year ago. The thing that is blatantly apparent is that Sirius is showing more rapid growth than XM is during the past year. Whether or not Sirius will begin to experience similar "growing pains" that XM experienced this year is hard to say as 2007 is going to be a completely different climate.

But should Sirius and XM continue on exactly the same paths they are following right now - based on only 2006 numbers - they could reach the same number of subscribers in the third quarter of 2007.

[more on SSG] 

XM Satellite Radio ended 2006 with over 7.625 million subscribers, adding 1.695 million new subscribers in 2006.

Based on preliminary results, XM achieved positive cash flow from operations during the fourth quarter of 2006. Much like Sirius, this is great news and a show of improved financial discipline from both companies.

Hitting 7.6 million subscribers means that XM added more than 442,000 new net subscribers during the 4Q06.

"XM completed another year of significant subscriber growth, despite retail softness, and did so with continued cost controls, achieving positive cash flow from operations during the fourth quarter," said Hugh Panero, XM's CEO in a statement.

The 7.625 million net subscribers is just below XM's revised guidance range of 7.7-7.9 million subs. While expectations on The Street weren't too high, it's still a disappointment. Sirius probably took a higher-than-expected retail share in the fourth quarter that aided to this outcome.

Gary Parsons, XM Satellite Radio's Chairman of the Board, will speak at the Citigroup Entertainment, Media & Telecommunications Conference at the Mandalay Bay Resort and Casino in Las Vegas.

This is the same conference that Mel Karmazin will keynote at, though Gary Parsons is scheduled to speak the day prior on Tuesday, January 9th, from 2:30-3:05pm PT (that's 5:30pm ET).

You will be able to listen to a webcast of the event here.

Chance Patterson of XM Satellite Radio and spokesperson extraordinaire, told Bloomberg that we "can expect to see an announcement from XM by Monday'' on last year's subscriber numbers.

Remember that during XM's 3Q06 earnings call, it was announced that beginning in 2007, XM will no longer release subscriber numbers prior to earnings.

"The Street is assuming that XM will have equivalent success with retail holiday sales and make its year-end subscriber guidance," Stanford Group analyst Frederick Moran also told Bloomberg.

And while Stanford Group and Cowen & Co. feel Sirius' subscriber numbers are wholly positive news for the industry, Motley Fool is quick to state that "it's not all roses in the Sirius camp." The Fool supports this with by pointing out that 4Q05 added 1.1 million net subs, while 4Q06 added "just" 0.9 million new net subscribers.

[via Seeking Alpha]