This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Holidays Are Huge for XM, Sirius Satellite

Satellite radio investors are expecting the gift of huge holiday growth under the tree next month, though some on Wall Street are already bracing for the stiff tab.

Heavy advertising, cash givebacks, a slew of new radios and Howard Stern's January debut will easily make this the biggest Christmas season yet for pay radio rivals XM (XMSR) and Sirius (SIRI), say analysts.

"It's going to be a great success," says Hoefer & Arnett analyst April Horace. "Go in a Best Buy or a Circuit City, satellite radio is pretty prominent. They have the best products they have ever had across the shelf."

Indeed, the companies are touting new lineups of portables and satellite receivers. And while the year-end holiday retail sales push is likely to account for the largest surge in new subscribers, investors can expect the added promotional push to ring up big expenses as well. This is an unsettling puzzle for investors who demand big growth but want to extinguish roaring cash bonfires at both companies.

But the satellite duo can't really afford to coast at holiday crunch time, especially when critical subscriber growth targets loom over their stocks. Sirius had 2.17 million subscribers at the end of September and has promised to pass 3 million by year-end. Meanwhile, XM had 5.03 million users and boosted its 2005-end forecast to 6 million.

Both shops are dangling $50 rebates to hook new users, and some industry watchers fear more dueling giveaways and price cuts could be in the works.

"Management stated that they will not start a price war, but will respond aggressively," Merrill Lynch analyst Laraine Mancini writes in a research note, referring to Sirius. "We reiterate that while seasonal promotion is normal, a price war could erode the profitability of the satellite radio business model and remains an investment risk." Mancini rates Sirius a buy and XM a hold.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,785.63 -19.08 -0.11%
S&P 500 1,943.70 -2.46 -0.13%
NASDAQ 4,417.6030 -4.4820 -0.10%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs