It can’t get any worse for satellite radio investors, but it does. Bear Stearns cut its forecast for year-end 2007 subscriber counts for Sirius (SIRI) and XM (XMSR). The bank took its forecast for Sirius to a range of 8.1 million to 8.2 million. The previous estimate was 8.5 million. For XM, Bear dropped it range to 9.2 million to 9.3 million from a previous target of 10 million.
Pacific Crest also cut its rating on XM, saying a merger with Sirius is unlikely.
At its current market cap of $5.32 billion and six million subscribers, Sirius has a value per subscriber of about $890. For XM, the number is about $700 based on it 7.6 million subscribers. But, the cost per month for Sirius subscribers to take the service is $12.95. So, it takes 68 months for a customer to cover that ratio of market cap per subscriber. That would assume no subscriber churn and customers who stay around almost six years.
Wacky math.
Douglas A. McIntyre can be reached at [email protected]. He does not own shares in companies that he writes about.
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