XM Satellite (XMSR): Pray Hard SIRI Merger Approved

XM Satellite Radio’s Q3 was nothing to write home about:

  • Only 20% revenue growth in an emerging business with low penetration
  • Business model transitioning from “retail” to more expensive (and presumably less profitable) OEM strategy, because retail sucking wind.
  • Cost per subscriber acquisition increasing almost as fast as revenue–19% year over year.
  • Churn 2.5% per month: 952,000 gross ads yielded only 315,000 net adds.
  • Ballooning adjusted EBITDA loss, even excluding merger costs ($45 million vs. $2 million, with only $9 million merger-related.
  • Rapidly declining cash balance (down $44 million) and only $231 million of cash left.
  • No news on the merger other than the usual “cooperating”

This is not a healthy company.  Shareholders had better pray that the Sirius (SIRI) merger goes through.  Release

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