- Bear Stearns is positive on XM Satellite (NASDAQ:XMSR) after recently completing an extensive check of a number of retailers across the country that suggested 3Q retail gross adds may have been better than firm's original expectations. As a result, they are raising their net adds for the platform to 325k from 270k previously.
Availability of the Audiovox Xpress and Roady2 were spotty in certain locations, suggesting that sales were higher than expected. However, the sporadic shortages likely would translate into either lower sales in 4Q or higher SAC due to air-shipments. Reduced power levels on the FM-mods are not resulting in higher complaints currently, but the sales reps are still suggesting professional installation for $50-$70.
Following the recent FCC re-certification of the FM-mod radios, they think XM will again be able to advertise efficiently in the crucial 4Q. Moreover, Oprah's addition would enhance consumer interest and awareness. While the FM-mod power levels and the installation requirement have not yet impacted retail sales, it is possible that 4q could be affected by sporadic shortages. As such, they are maintaining their FY net adds estimate of 2.2 mn subs and expect XM to end the year with ~8.1 mn subs. However, the firm will continue to closely monitor the retail channel for trends on the FM-mod issue.
Maintains Outperform.
Notablecalls: Bear's estimate was Street low anyway.
Availability of the Audiovox Xpress and Roady2 were spotty in certain locations, suggesting that sales were higher than expected. However, the sporadic shortages likely would translate into either lower sales in 4Q or higher SAC due to air-shipments. Reduced power levels on the FM-mods are not resulting in higher complaints currently, but the sales reps are still suggesting professional installation for $50-$70.
Following the recent FCC re-certification of the FM-mod radios, they think XM will again be able to advertise efficiently in the crucial 4Q. Moreover, Oprah's addition would enhance consumer interest and awareness. While the FM-mod power levels and the installation requirement have not yet impacted retail sales, it is possible that 4q could be affected by sporadic shortages. As such, they are maintaining their FY net adds estimate of 2.2 mn subs and expect XM to end the year with ~8.1 mn subs. However, the firm will continue to closely monitor the retail channel for trends on the FM-mod issue.
Maintains Outperform.
Notablecalls: Bear's estimate was Street low anyway.
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