Auto Sales Drop Could Have Bad Impact on Satellite Radio

Sales figures from auto manufacturers are starting to hit the wires, and the news is not good. The poor sales in the auto sector are now so bad that even with increased penetration of satellite radio installations, there will be an impact to the sector.

• GM sales were off by an astounding 45%
• Ford (F) sales were down 30%
• Honda (HMC) took a 25% haircut
• Toyota (TM) was down 23%

Many were expecting bad news, but sales down 45% is a big number to swallow. It is little wonder that analysts have taken it upon themselves to lower subscriber targets for satellite radio. As with anything, one must also look for a silver lining, but in this case that is a hard task. Sure, Sirius XM (SIRI) will have less spent on subsidies, but in the end, they still do need to grow their subscriber base, and the focus on the OEM channel makes their numbers vulnerable with auto sales at record lows.

Perhaps it is time to shift gears. Perhaps the company should throw some marketing support behind the a-la-carte receiver and the new XMP3 player. If consumers are holding onto their cash, perhaps they will be inclined to make their time in the car more enjoyable via satellite radio.

Times are indeed hard. Consumers are clearly holding onto cars longer. Investors should watch for analysts that have not issued reports recently to begin issuing updated models soon. The car news may even bring out new reports from those who had already updated models, but did not anticipate a 45% nosedive by GM, which is the biggest satellite radio contributor in the OEM channel.

Position - Long SIRI, No Position OEMs

Comments

[brandonland:]

everyone buy their friends and family a stiletto for christmas........

2008 Nov 04 08:33 AM

[pauljgourley:]

Missing the forest for the trees. Even if total auto sales are off an average of 40%, that still leaves a lot of cars with satellite radio. The good thing is that those people that are buying can afford it. The deals that are being lost contain a lot of margin credit consumers that can barely afford a payment let alone satellite.

2008 Nov 04 08:59 AM

[pauljgourley:]

Sue. I have never sued anybody in my life. I have been a stockholder for many years. Disgruntled with management, yes, but I haven't sued or joined a lawsuit.


On Nov 04 08:59 AM pauljgourley wrote:

> Missing the forest for the trees. Even if total auto sales are off
> an average of 40%, that still leaves a lot of cars with satellite
> radio. The good thing is that those people that are buying can afford
> it. The deals that are being lost contain a lot of margin credit
> consumers that can barely afford a payment let alone satellite.

2008 Nov 04 09:42 AM

[dayworker:]

There is very little talk about the actual numbers. Everyone seems to
avoid talking about the actual figures for this Corp.
The bottom line is this . The revenue stream is around $2.3 bil per
annum. The operating expenses, overhead, debt service, talent fees,
bosses salaries, subs acquisition, new product development, and advertising exceed revenue's. Sirius runs in the red.
Now add the debt obligations due in 2009. There is no way to refinance
with out added subs or revenue. No one is going to loan money when
there is no way to pay it back. Sirius has no intrinisic value other than
fluid subscriptions. With the prospects of growth very slim Sirius has
only a few options.
They will be taken over for a few cents on the dollar, bought out to
go private and the shareholders will lose, BK and the shareholders will also lose everything, dilute and the value will be basically zero with no
chance of stock prices recovering. In short, Sirius can not survive as it
is.
The fact is the management is either totally incompetent in their business model and hence the way they handle the revenue stream into
a loss, or they are enhancing themselves with the money at the expense
of the shareholders. In this way when the stock price drops so low they will take it private for themselves or thru BK.
If there is another way to look at the figures then someone should post it. Based on the figures Sirius has no value left in the stock price. There
is no value to a stock with out intrinsic values, that loses money and no
future growth anticipated, and mountains of debt.
Everyone is now waiting to see if Sirius goes private, dilutes or goes BK.
This is the reason for the law suit. If the way in which the bosses have
run Sirius is not challenged then they will just steal the Corp. legally and
thru manipulation. They have either taken from the revenue stream,
so badly managed it thru incompetence, or manipulated it out of existence, the only way to protect the shareholders is to sue and hold them accountable until we get the answers.
Sirius needs to go into receivership before the bosses get the Corp.
for themselves. The SEC needs to be notified that the stock price has been driven down by corruption and manipulation and that the delisting rule needs to be suspended while there is an on going investigation.
At the same time the control and management of Sirius has to be taken
out of the current bosses hands until the law suit is processed and an
objective interim management team is placed to run Sirius.
Otherwise in a few months it's all gone. If there is another scenario, post it. Waiting for revenue to increase to get Sirius out of this mess isn't
going to happen

2008 Nov 04 10:50 AM

[mgv11:]

I have thought before taht putting their eggs all in one basket with the auto's was a mistake. Likewise, counting on retailers to sell the product doesn't work. I find the salesman at Best Buy give very little attention to the Satrad locations. Mostly because they don't know the details themselves. This is a large hole in the current strategy, one that I wish they would address.

2008 Nov 04 12:56 PM

[Ricker:]

So the automakers are down, but not out completely. Mel himself said things in the auto industry would be flat. Right? The growth right now must come from products like panasonics new stuff, retail driven. But nothing is happening. SirisXM inventory at Best Buy, Circuit City and Radio Shack is ridiculous and CC's inventory has more dust on it than another shelf in the store. The stuff is in the back of the store, the end isle and at the bottom. What kind of retailing is this. Its November, what is the strategy guys?

2008 Nov 04 07:45 PM

[GetSIRI:]

I agree with Rickster, I dont need a new car but I'm ready for a new unit. My Sporster 5 has seen better days.

2008 Nov 04 08:51 PM