S&P Helped XM & Sirius After XM Earnings, Sort Of

Both XM Satellite Radio (XMSR-NASDAQ) and Sirius Satellite Radio (SIRI-NASDAQ) managed to post large gains on the day after XM reported this morning.  Standard & Poor’s is Maintaining its "3 STARS" (HOLD) rating on XM Satellite Radio (XMSR).  This was by S&P’s Tuna Amobi, who regularly appears on CNBC.

S&P sees multi-year ramp up of installation in OEM automotive units (GM, Honda, Nissan, Toyota), versus a dip in conversions and more retail weakness. XM affirms 9.0 to 9.2 million subscribers for 2007 and sees $111-$114 cost per subscriber (above prior forecast of $108), and expects a $170-$180 million adjusted operating loss vs. $166 million, but positive 2008 EBITDA. With potentially formidable odds against regulatory approval of merger with Sirius (SIRI), S&P is keeping its 12-month target price at $13.00.  Before a one-time loss S&P had estimates at 1 cent per share, thecompany’s first quarter loss per share of -$0.39 vs. a -$0.55 a yearearlier; but these are different than how we track our earnings reports.  This was in line with S&P and Wall Street estimates.

The verdict is still out on XM-Sirius as far as a merger, but both shares closed up on the day.  There is still a whole lot of calendar between now and whenever this gets decided.  XMSR closed up almost 7% at $11.78 after earnings on almost 15 million shares; SIRI shares closed up 4.6% at $2.96 in conjunction.

Jon C. Ogg
April 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.