Directed Electronics Provides Some Satellite Data In Guidance

Includes: DEIX, SIRI
by: Spencer Osborne

Directed Electronics (OTC:DEIX), the retail distribution partner of Sirius (NASDAQ:SIRI), issued some new guidance Tuesday, and part of its presentation centered on satellite radio volume. Of particular note for investors, Directed anticipates a 15% to 20% decrease in sales volume as compared to last year.

Many analysts have anticipated a dip at retail between 20% and 30%. Directed, as sellers of these receivers, should have a pretty good idea of anticipated volume, especially considering that it has counted numbers at least through Father’s Day.

Report Excerpts and Key Data:

As of May 10, 2007:

  • Sales in the range of $475 - $510 million
  • 8%-16% increase over 2006 sales
  • Gross sales in security & entertainment products to grow in the range of 40% - $46%
  • Excluding Polk growth would be in mid-single digits
  • Gross sales in satellite radio products to decline by 11% - $22%
  • SIRI decreased subscriber growth from 2.7 million in 2006 to over 2 million 2007
  • EBITDA to increase to $74 - $78 million
  • Pro forma net income in the range of $0.95-$1.05 per diluted share
  • Top-line growth in core business to be offset by declining satellite radio sales
  • Negative impact of non-cash stock-based compensation expense, higher investments in infrastructure and provision for litigation expenses
  • As of July 6, 2007:

    Based on recent YTD sell-through experience (through and including Father’s Day) in our Satellite Radio Business and our projections for the balance of the year, where lower priced SIRIUS receivers are composing a meaningfully larger percentage of our total satellite radio sales than in our original plan, we now anticipate a reduction in our SIRIUS revenues from prior years in the range of approximately 35-40%. This change in guidance is driven principally by a mix shift to lower priced units and an approximate 15-20% reduction in planned unit volume. We plan to provide full year guidance to our sales and earnings at our Q2 Earnings Release on August 9th, 2007.

    Disclosure: Author is Long Sirius, Long XM (XMSR); no position in Directed.

    DEIX vs. SIRI 1-yr chart:
    deix siri chart