SiriusXM And Slowing Subscriber Growth

Crunching Numbers profile picture
Crunching Numbers

In a previous article I noted that the SiriusXM (NASDAQ:SIRI) 2012 subscriber guidance failed to meet Wall Street's consensus estimates and that the low number was just one of several disappointing subscriber metrics. The conversion rate - the percentage of OEM trial subscribers that become self pay subscribers - is expected to show no improvement in 2012 and the self-pay monthly churn (the cancellation rate for subscribers that had previously chosen to pay for the service) is projected at 2.1%. These are most likely two of the primary drivers behind the company's relatively low forecast of 1.3 million net additional new subscribers in 2012.

Impact of trials
A third driver is the mix of sales by OEMS. Unpaid trials, unlike the paid promotional trials, are not included in the Sirius subscriber total of 21.9 million. On the conference call James E. Meyer, Sirius President of Sales and Operations, had this to say about the trials:

So in 2011, we have supply disruptions in Asia. What we have is shift in mix towards U.S. and European manufacturers who tend to be paid trial partners. And I think the industry view is that there will be a shift in mix back towards Asian manufacturers in the course of 2012, which will be a shift back towards unpaid trial partners. So part of what you're seeing in the sub-outlook is just shifting mix in paid versus unpaid trial subscriptions,...

The issue here is that the unpaid trials were also up very significantly in 2011. Paid trials went from 3.5 million at year end 2010 to 4.0 million at year end 2011, an increase of 0.5 million. During that period, total trials went from 4.3 million to 5.4 million, indicating that unpaid trials climbed at an even faster rate, an increase of 0.6 million. It's a bit difficult to understand what the "shift

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Crunching Numbers profile picture
As of May 13, 2022, ranked #95 out of 10,688 Bloggers (top 1%) by TipRanks and #392 out of 18,543 (top 2%) overall experts by is mostly on Sirius XM Holdings and income investing,  I have 30 years (through 2000) experience working for basic manufacturing and high tech industries in both the US and Europe. Company sizes ranged from start-ups to Fortune top 10. Experience as manager and/or grunt in fields of financial analysis, revenue forecasting, business planning, budgeting, pricing analysis, compensation planning, contracts, marketing and product management. Have been investing in stocks nearly 50 years, options for 30 years and on and off in real estate since 1981. Laid off when the dot-com bubble burst, and began investing full time.BS in engineering from Boston U, MBA in finance from Rutgers.

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