Ahead of the Bell: Sirius Satellite
Tuesday December 5, 7:57 am ET
Sirius Satellite Falls in Pre-Market, Bear Stearns Cuts Rating on Company's Lowered Guidance
NEW YORK (AP) -- A Bear Stearns analyst slashed his rating on Sirius Satellite Radio Inc. Tuesday, after Sirius cut its outlook for new subscriber additions due to lower-than-anticipated retail sales since Thanksgiving.
Shares fell 27 cents, or 6.5 percent, to $3.90 in pre-market trading after closing at $4.17 Monday on the Nasdaq. The stock has traded between $3.60 to $7.98 in the past 52 weeks and is down 38 percent from the beginning of the year.
"While satellite radio as a category is not among the 'hot' gift items this holiday season, most consumers are concerned either about the cost of the receivers themselves or the hidden costs of ownership that include installation costs, and the prices of the accessories and kits," said Bear Stearns analyst Robert S. Peck in a client note.
The lowered guidance prompted Peck to slash his rating on Sirius to "Underperform" from "Outperform," noting a weak retail environment could continue to weigh on Sirius, while the company's automotive partners are losing market share.
Sirius and rival XM Satellite Radio Holdings Inc. sell radios in stores and through deals with auto makers, which add radios directly to new cars. But Peck notes that XM Satellite Radio's partners, which include Toyota Motor Corp., General Motors Corp., Nissan Motor Co. and Honda Motor Co., are gaining market share compared with Sirius's partners, Ford Motor Co. and DaimlerChrysler AG, which are losing market share. In addition, Sirius' auto partners are behind XM Satellite's partners in deploying new units, added Peck.
"For this reason, Sirius remains more dependent on the retail market than XM, and retail environment remains weak," wrote Peck. "As such, we think the stock likely will trail XM's until there is better visibility into growth."
Sirius said it expects to add between 2.6 million to 2.8 million new subscribers in 2006, to a total of between 5.9 million to 6.1 million by the end of 2006. Previously, the company expected to end the year with a higher total of 6.3 million subscribers. |
