Ford ( F) put its stamp on the Sirius ( SIRI) bandwagon Tuesday, saying it will help the upstart pay-radio company double its subscriber rolls.
The automaker will offer factory installation of Sirius satellite radios starting this summer. Ford will make Sirius service optional on as many as 21 Ford and Lincoln Mercury models and expects to generate as many as a million new users for the company. The deal means more reach for New York-based Sirius, just as it has taken on a hefty tab to acquire big-name talent. The company became a Wall Street favorite late last year after it signed up New York shock jock Howard Stern and former Viacom ( VIA) chief Mel Karmazin. Though Ford had aligned itself with Sirius nearly two years ago, until now its level of commitment was uncertain. While rival XM Satellite Radio ( XMSR) enjoyed a tight bond with big investor and satellite radio promoter General Motors ( GM), Sirius had managed to secure only a tepid relationship with Ford under which its radios were a dealer-installed option. But Tuesday, Ford turned Sirius booster with plans to double the pay-radio shop's subscriber total by 2007. To entice users, Ford is expected to offer six months or more of free satellite radio programming to new car buyers. "This is good news, but not unexpected," says a money manager who sold his Sirius position last month. Investors sent the stock up just 6 cents to $7.54 in midmorning trading. Sirius shares were among the Nasdaq's biggest winners in 2004, doubling over the course of the year after a furious late-year rally. The stock is regularly the most active issue on the Nasdaq, trading an average of 120 million shares daily. Sirius even managed to eclipse rival XM, which started earlier and has more subscribers, with the fall's headline-grabbing talent snatch. Still, signs of investor fatigue are setting in as the company runs out of major developments. Last week, the company notched its millionth subscriber, but some investors are wondering what else Sirius can do to keep up its rabid following. "I think the cat's out of the bag," says the money manager, who expects the stock to cool off as the satellite radio market goes into its seasonal slowdown.