Posted on 12/05/2006 4:06:58 PM PST by MovementConservative
Shares of Sirius Satellite Radio fell more than 7%, or 30 cents, to $3.89 a share in the first 30 minutes of trading Tuesday morning (Dec. 5) after the satcaster cut its year-end subscriber forecast by 200,000 to 6.1 million. Shares of SIRI hit a low of $3.75 at 9:48 a.m. before beginning a slight rebound.
After the stock market closed Monday evening (Dec. 4), Sirius CEO Mel Karmazin issued a statement noting that sales of satellite receivers since the Thanksgiving weekend “have not been at the pace we had anticipated. We are updating our year-end 2006 subscriber guidance to between 5.9 million and 6.1 million.”
The move by Sirius reverberated on Wall Street as analysts began slashing their ratings on the satcaster, sparking a new wave of predictions that Sirius would have to merge with its rival, XM Satellite Radio, to survive.
“I have to tell you, I thought that without a merger with XM, these two companies might not create a lot of wealth in the next few years,” wrote Wall Street gadfly Jim Cramer in his RealMoney.com column posted this morning on TheStreet.com. “Mel convinced me I was wrong," he continued. “I wasn't. I blew it. I should have stuck to my guns. I feel embarrassed. And I don't like it,” bemoaned Cramer, who also hosts CNBC’s “Mad Money.” “Mel had been money in the bank. Everyone deserves one strike. But in my league, two strikes and you're out.
“Even a half-strike more and you're out in this satellite game,” Cramer continued. ”If Mel hits the low end of the range or doesn't hit it at all -- both entirely possible if sales don't pick up in the next two weeks -- this one's done for, without a merger.”
Bear Stearns satellite analyst Robert Peck cut his rating on Sirius to underperform, noting a weak retail environment and the fact that Sirius is losing ground to XM in the race to have new car manufacturers insert its receivers in new cars. Morgan Joseph’s David Kestenbaum, meanwhile, slashed his rating on Sirius to hold.
In my case I work in a very rural area and can't even bring in a 50,000 watt radio station. For me to get news, music and talk radio...XM was the answer for me. The price is worth it to me.
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