By Relmor Demitrius
Sirius XM Radio (NASDAQ:SIRI) is set to release their Q3 subscriber net additions as early as next week. Mel Karmazin (CEO of Sirius XM Radio) likes to let investors know how they fared in regards to subscriber numbers as close to the end of the quarter as possible, because these numbers are known relatively quickly once the quarter is closing. Due to improving auto sales and improving economic conditions, Sirius XM has been steadily adding subscribers since Q3 of 2009.
Sirius XM added 583,000 in the second quarter of 2010. As long as the Seasonally Adjusted Automobile Rate comes in over 11 million a year, Mel Karmazin has stated that the company will be able to add subscribers with current metrics. As of today, the latest estimate of SAAR is coming in around 11.6 million area, some have it a bit higher, others a bit lower. Knowing this, let us look at what the subscriber net additions will be like for the company in Q3.
I am going to assume September auto sales come in right around 1 million. This is the estimated total for the month. This would give us roughly 3,047,648 total vehicles exposed to the product. 60% of those vehicles come with a promotional subscription to either XM or Sirius Satellite Radio.
Using this information, retail information (also called "after market” net additions, including used cars) and churn of around 1.8%, same as last quarter, and reflecting the trend in this area, we arrive at 475,000 approximate net additions for Q3. This is higher than Q3 of 2009, which added only 102,095 net subscribers, a net change year to year of positive 373,493.
Sirius XM entered the quarter with 19,527,448 subscribers. Adding on this quarter's additions would bring the total to 20,002,448, breaking the
