A very good analyst report you can see a few postings ago (posted by
Valueman). Another good report is done by Merril Lynch. I cannot post it here because it it in an *.pdf format. But you can download it from their homepages (you have to subscribe, but I think it it free for one month.)
Some very rough projection on earnings and revenues you can do by yourself:
Scenario 1 (conservative, like Merryl Lynch):
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They say that in 2007 SIRI might have 10 million subscribers,
and they speculate that the subscribtions do cost then about $13.
(Now $10.) So the revenues from the subscribers then are $1,65 billions per year. Let us suppose that they get another 100 millions from advertising (remember: 50 channels are commercial free, the other 50 channels are with advertising). So together we might have revenues of $1,75 billions.
Now in 2007 all Prefered Stocks might be converted and all depts might
be payed back, so in 2007 they do not have to pay any interests any more. Then they might have a break even point at perhaps 2 million
subscribers. (Remember that one usually estimates the break even of
EBIT in 2004 with four or five million subscribers, this is because in 2004 SIRI has to pay a lot of interests!!)
And above 2 million each subscriber contributes with, let us say,
55% to the earnings after taxes.(David Margolese, CEO of SIRI, has estimated 70% one year ago!). So the earnings per year are:
8 million subscribers * 12 months * $13 * 55% = $686 millions.
Now in 2007 we might have 62 million common stocks (after conversion of all Preferreds, options and warrents), so the earnings per share
in 2007 might be $11,1. And with an PER of 25 the stock then will be
at $277.
Remember that this was a conservative estimate.
Now a more speculative one:
Scenario 2 (speculative):
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Some other independent market researchers estimated a SDARS subscriber
number of 45 millions in 2008. Let us suppose that half of it gets
SIRI, the other half XMSR. Then in 2008 SIRI has 22,5 million subscribers, and analog to the above calculation SIRI then has
revenues of $3,61 billions (100 millions advertising revenues included).
Earnings: About one year ago David Margolese estimated the subscriber
break even point at 1,7 millions, and above them a profit margin of
70%. But 70% I think might be too high. Let us suppose 60%. Then analog to the above conservative calculation we get:
(22.5 - 1.7 = 20.8) million subscribers contribute to the yearly earnings with 12 * $13 * 60% = $93.6 per subscriber, so all together
we have earnings per year of $1.95 billions !!!!
With an estimated number of 62 million stocks in 2008 we have then an earnings per share = $31.5 . Let us estimate an PER of 25 (in 2008),
then the stock will be at $788 according to this speculative estimation.
Summary:
In 2008 the stock might be somewhere between $277 (conservative)
and $788 (speculative).
There are some marketing researches that project on the very long run
even more subscribers. They say that in the very long run SDARS will
have a market share in the US of about 35 - 40 %. With about 200 million cars then we have 70 - 80 million subscribers for cars only.
And then there are subscribers for their home broadcasting too.....
All these subscribers might be devided equally to SIRI and XMSR,
but one cannot forsee if the FCC will not give some other licenses to some other SDARS companies too.
Manfred |
