Last November, when everyone already knew the economy was going south, Sirius XM (SIRI) CEO Mel Karmazin unveiled a long-term growth forecast that seemed low — single-digit growth for years. Now it looks like the freefalling U.S. car industry and increased competition from other digital audio services is going to make Sirius miss those estimates.
At the time, Sirius expected to grow its subscriber base 8% in 2009 after 10% growth in 2008. A month and a half later, Sirius wound up missing its projection for 2008, and now it’s likely that it’ll miss its forecast in 2009.
Last November, Sirius projected it would finish 2009 with 20.6 million subscribers, or 1.6 million than the 19.0 million it finished 2008 with. But Sirius announced today that during the first quarter, the satellite radio monopolist lost 400,000 net subscribers, finishing March with 18.6 million subs.
That means Sirius XM now has to add 2.0 million net subscribers in 9 months instead of 1.6 million subscribers in 12 months. With most new subscribers coming from new car buyers, and fewer people buying cars, the odds of that happening are very low. And Sirius will probably have to revise its projections down.
“We did see some pick-up in sales in the last week of March; however, April sales did not continue at that rate and at this point, there is no visibility into when sales will rebound,” Sirius XM exec James E. Meyer said on the company’s earnings call today.
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