Wednesday, August 02, 2006

Quarterly Subscriptions as of 2Q06

From the charts above, it is clear that Sirius started closing the subscription gap in 4Q05; however, it was in 1Q06 that Sirius was at near parity with XM on gross subscribers. In the most recent quarter, the gap in gross subscribers began to widen again. It's curious how close Sirius gross has been to its net. Only in recent quarters has that gap began to grow. Next quarter is where the Sirius OEM dropouts will really start to hit. However, Sirius did a good job in increasing the OEM installs this past quarter, which will offset any increase in OEM dropouts for the near future.

When looking at it from an increment market share on a percentage basis, again it was 4Q05 when Sirius make a breakthrough with Stern. The gap continued to close in 1Q06. Although the Stern effect still appears to be strong, the 2Q06 results indicate the the Stern effect likely is beginning to wane. Next quarter will tell the tale.

It is remarkable that even with the jump in OEM subscriptions and increased incremental retail market share, Sirius was unable to surpass XM in gross subscriptions. In fact, the gap widen. The gross subscriptions are declining for both. Faced with this and the current FCC probe, it was surprising to see Sirius increase its guidance. They will have a challenging 4Q.

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