Sirius XM Now Shrinking

The recession is not helping Sirius XM (SIRI) radio as car purchases stall and competition increases.

Update: Sirius XM is going to miss its growth forecast.

Blow-by-blow from today’s earnings release:

  • The satellite radio monopolist said it lost 400,000 net subscribers during Q1, finishing the quarter with 18.6 million subs.
  • Retail subscribers — those who sign up for Sirius on their own, not by buying a new car — were the biggest defectors, at 370,000 net sub losses, down from 49,000 net sub losses a year ago.
  • But “OEM” subscribers — people who get Sirius radios built into their new cars — plummeted much faster. During Q1, a net 38,000 OEM subs left Sirius, almost 700,000 subscribers worse than net sub growth of 659,000 a year ago. A lot of that can be blamed on Detroit’s downfall.
  • Churn, the per cent of customers who ditch the service each month, increased to 2.2% from 1.9% a year ago.
  • And Sirius XM’s conversion rate — getting people to sign up for paid service after it’s free for a while in their new car — fell to 45%, down from 51% a year ago.

At this rate, it’s going to be very hard for Sirius to grow subscribers 8% this year, as the company predicted last November. That’s one reason why shares are down 18% to $0.43 today.

The (mildly) better news: Sirius expects to report more than $350 million in 2009 adjusted income, up from its previous guidance of $300 million. Still, an ugly situation that has no reason to get better.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

media sai-us