Sirius Upgrades Year-End Subscriber Projections
Sirius, though a year later to market than its rival XM and with less than 1/2 the subscribers, used various superlatives Thurs. to declare that it was the prime mover in satellite radio.
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As a result of its first-quarter momentum, Sirius upgraded its projection for subscriber growth this year to 2.7 million from 2.5 million by the end of 2005. That’s still less than 1/2 the 5.5 million XM has projected. But Sirius CEO Mel Karmazin declared in a conference call his company had “a blowout quarter in which we over-delivered on all our key metrics.”
Sirius added 305,000 subscribers in the quarter, a 230% increase from the 91,000 a year earlier. Karmazin said Sirius captured 36% of the new subscribers added in the quarter by it and XM combined. Noting that compares with the 20% share Sirius boasted in the quarter a year earlier, Karmazin said Sirius was the “fastest growing” satellite radio provider. About 175,000 of the new subscribers added were from aftermarket retail, Karmazin said. At that rate, Sirius will reach “approximate parity” at retail with XM by year-end, he said.
The company is on target to become “cash flow positive” by 2007, Karmazin said. First quarter, the company’s net loss widened 34% to $193.61 million on a 365% increase in revenue to $43.22 million. Sirius recorded its lowest monthly churn ever at 1.3%. Average subscriber acquisition costs fell 23% from a year ago and will finish below $145 for the year, with additional improvement expected in 2006, the company said. “Satellite radio is a hot category and we are the hottest company in that category,” Karmazin said.
Pres. James Meyer said Sirius plans a promotion throughout May -- built around Father’s Day and graduation gift-giving --that will offer a $50 rebate on the purchase of any Sirius aftermarket radio. Meyer said the offer addresses what research has found to be the biggest “barrier” to satellite radio adoption -- high retail prices. Figuring prominently in the promotion will be the Sportster portable; production started this week, and it will be available soon at $169 list. The Sportster features a 44-min. memory buffer for pause and recording, Meyer said.
Also this week, STMicroelectronics has begun wafer production on “Generation 3” Sirius chipsets, Meyer said. The first products incorporating the chipsets are expected to reach market by late summer, and it’s hoped they'll reduce product costs 20-30%, Meyer said.