New York - Sirius Satellite Radio has had it’s rating slashed after the company cut its outlook for new subscriptions due to lower-than-anticipated retail sales since American Thanksgiving.
Shares fell 27 cents, or 6.5 percent, to $3.90 in pre-market trading on Tuesday, after closing at $4.17 Monday on the Nasdaq. The stock has floated between $3.60 and $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,” reported Bear Stearns analyst Robert S. Peck.
The lowered company outlook prompted Peck to slash his rating on Sirius to “Underperform” from “Outperform,” noting an overall weak retail environment could continue to weigh on Sirius. Meanwhile, the company’s automotive partners are losing market share.
Sirius and rival XM Satellite Radio Holdings Inc. sell receivers in stores and through deals with auto makers, which place satellite units in their new cars. Peck notes that XM’s partners, which include Toyota, General Motors, Nissan, and Honda, are gaining market share compared with Sirius’s alliances with Ford and DaimlerChrysler, who’re seeing their slice of the pie grow thinner and thinner.
“For this reason, Sirius remains more dependent on the retail market than XM, and the 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 recently said it expects to add between 2.6 to 2.8 million new subscribers in 2006, to amass a total of between 5.9 and 6.1 million by the end of December. Previously, the company had expected to end the year with a total of 6.3 million listeners. |
