Sirius Blinks in the Satellite-Radio Wars

This column was originally published on RealMoney on Dec. 5 at 11:37 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

It's been less than two weeks since Santa Claus rode down Broadway in the Macy's Thanksgiving Day Parade, but he doesn't seem to have brought a ton of shoppers with him.

First, we heard from Wal-Mart (WMT Quote) that business was not exactly robust, and now Sirius (SIRI Quote) is pulling in its horns.

Investors may be on their own shopping spree, buying stocks on Wall Street, but signs are not robust for many retailers for the holiday selling season.

Chilly Reception

Late Monday afternoon, Sirius issued a press release saying that business was softer than expected and lowering its guidance for total year-end subscribers to a new range of 5.9 million to 6.1 million vs. its Nov. 8 forecast of 6.3 million subscribers. Shares were slipping on the news.

One must presume that management was originally hoping for more robust numbers throughout the year and thought it was low-balling when it first provided guidance during its 2005 year-end conference call. While it raised its year-end subscriber forecast during the year, it did so very gingerly by adding only 100,000 each quarter to 6.2 million and then 6.3 million. Now, it's back to the opening bid of 6.1 million subs as the top end of the range.

By contrast, XM Satellite Radio (XMSR Quote) has been lowering its year-end subscription numbers all year from an original estimate of 9 million to its most recent forecast of 7.7 million to 7.9 million. That last estimate equates to expectations of only 600,000 fourth-quarter additions, which had seemed small in comparison to Sirius' vigorous expectations of adding 1.2 million new fourth-quarter subscribers.

If XM does add 600,000 new subscribers in the fourth quarter, that will mark the biggest quarter of its 2006 year. But if Sirius is only able to add 800,000 new customers, it will only barely nose out the 761,000 it added in the first quarter of 2006. Sirius also expects more factory-installed car units in its mix this year, which would push retail even lower as a contributor to total new subscribers.