This Day On The Street
Continue to site
ADVERTISEMENT
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

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 - Get Report), 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
SIRI $3.89 -1.02%
AAPL $128.70 -0.19%
FB $78.81 -0.23%
GOOG $540.78 0.54%
TSLA $230.51 1.98%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs