Wednesday, February 16, 2011

Sirius Expectations Don't Match Results

While Sirius is seeing growth, subscribers and revenue are both up, their results don't meet the expectation of analysts. And while debt remains high, they are working hard to reduce the amount they owe. In addition, continued growth of the automotive industry as well as increased spending in the advertising community should help push Sirius higher. "Sirius XM had about 20.2 million subscribers as of Dec. 31, up from approximately 18.8 million a year earlier. It added about 1.4 million net subscribers in 2010. Looking ahead, the New York company predicts 2011 revenue of about $3 billion. Analysts expect revenue of $3.08 billion. Sirius XM anticipates it will add another 1.4 million net new subscribers in 2011." Unfortunately, analysts expected more.

For Sirius, the bigger question is competition with web based applications. Sirius owns the road, but the home belongs to the web. Web-based music subscription services like Pandora may simply try to push into Sirius territory. Whether wifi can work better in the car verse satellite is debatable. And Sirius may have exclusive content, like NFL, MLB, and of course Howard Stern. But its exclusivity is challenged by some web based subscriptions like what the MLB offers on the computer and mobile devices.

Perhaps the opportunity lies not in competition but developing a partnership program that brings the two sides together. Sirius and Pandora could potentially both benefit from such an arrangement. And certainly the customer gets easier access to the content.

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