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Old 12-19-2006, 06:08 PM   #1
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Default Real OEM and Retail Breakdowns.

Is XM going to run away with the lion's share based on OEM content ?

I grew tired of taking other people's word for it and looked up some Q-10 numbers for Q1, Q2, Q3 - 2006 for Siri and XM. I was shocked at how well Siri was doing in BOTH OEM and retail.

I save you the quarterly breakdowns.

There were a total of 3.06 million net subs during this period.

Siri had 59% total share.
XM had 41%.

XM had 35% of the net retail market
Siri had 65%.

Siri had 52% of the net OEM.
XM had 48%.

By Q3, XM was only taking 25% of net market retail.

My take aways:

XM is not capitalizing on their 60-40 OEM advantage. Their load rate is much lower than Siri's despite their market advantage in this area.
XM has retail customers defecting to Siri retail it appears. Also Siri is preferred at retail almost 3:1 as of last quarter.
Siri had more net OEM installs ( 56% ) Q2 and Q3 than XM.
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Old 12-19-2006, 06:42 PM   #2
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Quote:
Originally Posted by Whiskerbiscuit
Is XM going to run away with the lion's share based on OEM content ?

I grew tired of taking other people's word for it and looked up some Q-10 numbers for Q1, Q2, Q3 - 2006 for Siri and XM. I was shocked at how well Siri was doing in BOTH OEM and retail.

I save you the quarterly breakdowns.

There were a total of 3.06 million net subs during this period.

Siri had 59% total share.
XM had 41%.

XM had 35% of the net retail market
Siri had 65%.

Siri had 52% of the net OEM.
XM had 48%.

By Q3, XM was only taking 25% of net market retail.

My take aways:

XM is not capitalizing on their 60-40 OEM advantage. Their load rate is much lower than Siri's despite their market advantage in this area.
XM has retail customers defecting to Siri retail it appears. Also Siri is preferred at retail almost 3:1 as of last quarter.
Siri had more net OEM installs ( 56% ) Q2 and Q3 than XM.
Thanks for compiling that for us.

A lot of people speculate that we the retail trend will balance out (50/50) now that the Stern effect has settled a bit. However, I think people under estimate the power that Nascar will have. Really, it completely depends on Sirius decides to market it - but if they do it correctly, I think it has potential to be a huge boost both immediately and in the long run.

I think these gaps will actually stay about where they are in 2007, possibly closing by up to 10%. My point: Sirius will continue to dominate.
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Old 12-19-2006, 07:52 PM   #3
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Quote:
Originally Posted by Kurt@binvisions
Thanks for compiling that for us.

A lot of people speculate that we the retail trend will balance out (50/50) now that the Stern effect has settled a bit. However, I think people under estimate the power that Nascar will have. Really, it completely depends on Sirius decides to market it - but if they do it correctly, I think it has potential to be a huge boost both immediately and in the long run.

I think these gaps will actually stay about where they are in 2007, possibly closing by up to 10%. My point: Sirius will continue to dominate.
Thanks for the nice mail.

I'm impressed that Siri is really now taking 75% of retail before NASCAR hits. I think this number is thrown off compared to Bridge ( which has Siri at 60% ) as Siri is doing more web sales. This is always overlooked in print. Per Alexa, Sirius has typically 30-50% more hits than xm.

Unlike OEM, Retail really reflects what the consumer wants.

I wonder how long this overwhelming ( once again BEFORE NASCAR ) at retail preference won't demand attention when OEM contracts come up for renewal ? This can't be measured, but will change the future landscape.

Wouldn't it be funny if a merger would be blocked by the FCC ( 30-35 % chance IMHO) only to have Siri eventually cripple XM ? Keep in mind that there is no doubt that Siri will be getting 65-75% of all ad revenue due to the programming content. This is like adding millions of subscribers to the bottome line.

BTW.... in Q3 2006 Siri had 206 net retail compared to XM at 68.
Q2 2006 Siri had 276 net retail compared to XM at 168.

Q3 2006 Siri had 236 net OEM compared to XM at 217.
Q2 2006 Siri had 324 net OEM compared to XM at 229.

It looks to me that Siri will beat out XM in 2007 by 300-700K net.

Siri has two years to close the deal or convert OEM contracts. After that, they MAY succumb to critical masse at least to the break even point in 2010-2011.

Last edited by Whiskerbiscuit; 12-19-2006 at 08:04 PM..
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Old 12-19-2006, 08:02 PM   #4
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You have to take into account how many OEM Subscribers are actual self-paying subs and how many are in the free trial. You should then subtract 50% from each company's trial subs to account for the eventual churn off.

I think it's more accurate to count XM self-paying subs vs. Sirius self-paying subs than the way you are doing it. Anyway, with Nissan and Toyota(supposedly) going over to XM, XM will have an advantage starting in the 2008 model year.
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Old 12-19-2006, 08:55 PM   #5
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Quote:
Originally Posted by Whiskerbiscuit
Is XM going to run away with the lion's share based on OEM content ?

I grew tired of taking other people's word for it and looked up some Q-10 numbers for Q1, Q2, Q3 - 2006 for Siri and XM. I was shocked at how well Siri was doing in BOTH OEM and retail.

I save you the quarterly breakdowns.

There were a total of 3.06 million net subs during this period.

Siri had 59% total share.
XM had 41%.

XM had 35% of the net retail market
Siri had 65%.

Siri had 52% of the net OEM.
XM had 48%.

By Q3, XM was only taking 25% of net market retail.

My take aways:

XM is not capitalizing on their 60-40 OEM advantage. Their load rate is much lower than Siri's despite their market advantage in this area.
XM has retail customers defecting to Siri retail it appears. Also Siri is preferred at retail almost 3:1 as of last quarter.
Siri had more net OEM installs ( 56% ) Q2 and Q3 than XM.
Where are the links to prove that what you have posted is correct?
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Old 12-20-2006, 06:49 AM   #6
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Quote:
Originally Posted by hieian
Where are the links to prove that what you have posted is correct?
No links, if it was that easy, some uncreative and overpaid writer would copy it, get a raise, and eat a donut while blathering magpie opinions..... ( like Jacoby or Motley Fool to a lesser degree) pounding that XM's OEM contracts will rule the world without ever comparing ramp up's to historical.

It isn't hard. Screen each companies Q10's I use Yahoo to access them.
Each company reports the breakdown although XM hides their numbers prior to Q2 this year.
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Old 12-20-2006, 01:45 PM   #7
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Those numbers are shocking!

Not that I'm suggesting you implied it, but it does nothing to end the debate about the overall viability of Sirius, XM, or both. If anything, it throws gasoline on the debate of whether they will merge (obviating the question 'what does Sirius have to offer XM?').
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Old 12-20-2006, 02:37 PM   #8
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Quote:
(obviating the question 'what does Sirius have to offer XM?').
I've been reading that statement a lot lately on all of the sat radio forums. If they merge what does Sirius have to offer XM besides a ton of debt? And XM's technology is superior so why would they merge?

Sirius has been kicking XM's ass the last few quarters, thats enough of a reason to merge. 2-3 years ago I was the number one believer that there's plenty of room for 2 sat radio companies. I no longer believe that, the landscape has changed. Ipods, etc. are eating XM's and Sirius's lunch, and the only out for Sirius and XM might be a merger. Sure XM could play the waiting game and wait for Sirius to fold, but Sirius might hang on long enough to make things hairy for XM. So to save themselves XM might be interested in a merger.
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Old 12-20-2006, 02:56 PM   #9
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I thought this article looked (superficially) at what each company could get out of the deal.
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Old 12-20-2006, 05:55 PM   #10
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Quote:
Originally Posted by Whiskerbiscuit
Is XM going to run away with the lion's share based on OEM content ?

I grew tired of taking other people's word for it and looked up some Q-10 numbers for Q1, Q2, Q3 - 2006 for Siri and XM. I was shocked at how well Siri was doing in BOTH OEM and retail.

I save you the quarterly breakdowns.

There were a total of 3.06 million net subs during this period.

Siri had 59% total share.
XM had 41%.

XM had 35% of the net retail market
Siri had 65%.

Siri had 52% of the net OEM.
XM had 48%.

By Q3, XM was only taking 25% of net market retail.

My take aways:

XM is not capitalizing on their 60-40 OEM advantage. Their load rate is much lower than Siri's despite their market advantage in this area.
XM has retail customers defecting to Siri retail it appears. Also Siri is preferred at retail almost 3:1 as of last quarter.
Siri had more net OEM installs ( 56% ) Q2 and Q3 than XM.

I think your analysis is very interesting, and it echoes what Mel has said recently in interviews that Sirius leads "its competitor" in net OEM's the last couple of quarters.

However, the XM fanatics will point out this is simply a matter of churn. They still have more gross subs as retail and OEM. So, Jacoby and his gang believe that Sirius will go through this period of churn (that XM is experiencing now) in 2007. That churn with the lesser of gross nets will hurt Sirius more.

But I tend to look at it differently. Sirius' churn will be less, because subscribers aren't leaving Sirius to go to XM! (I can believe whatever I want! )
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Old 12-20-2006, 06:44 PM   #11
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Quote:
Originally Posted by NFL-Fan
I think your analysis is very interesting, and it echoes what Mel has said recently in interviews that Sirius leads "its competitor" in net OEM's the last couple of quarters.

However, the XM fanatics will point out this is simply a matter of churn. They still have more gross subs as retail and OEM. So, Jacoby and his gang believe that Sirius will go through this period of churn (that XM is experiencing now) in 2007. That churn with the lesser of gross nets will hurt Sirius more.

But I tend to look at it differently. Sirius' churn will be less, because subscribers aren't leaving Sirius to go to XM! (I can believe whatever I want! )
This is the response I was waiting for. The valid argument that I had with myself prior.

The percentages still don't match. Even if Siri had the same exact subscribers count as XM, the retail would still be only about 3-5% less share with OEM being closer, but still not a slam dunk for XM.

Sirius's churn in the last quarter were similar if not identical to XM. What's important here is that a years worth of sales on the OEM side came to " roost " ( free subs expired ) and the numbers were still within parity. E.G. it appears to me ( early data only ) that Siri has about 20 % LESS OEM churn than does XM. This might put Siri's OEM renewals at to 65%.

This won't be proven overnight as it takes more than one quarter ....but why would anyone ( I debate within ) think that Sirius has a 75% dominance ( spelled preference ) in retail without this preferential variance NOT reflecting itself on the OEM side when it comes to uptake ?

" It's not logical " Spock would say.
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Old 12-20-2006, 06:52 PM   #12
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Quote:
Originally Posted by Satradioman
I've been reading that statement a lot lately on all of the sat radio forums. If they merge what does Sirius have to offer XM besides a ton of debt? And XM's technology is superior so why would they merge?

Sirius has been kicking XM's ass the last few quarters, thats enough of a reason to merge.
You do indeed bring up an interesting perspective to this debate. I too have said, what would XM possible want with SIRIUS due to the debt, inferior technology. However, I am of the opinion that as we move into 2007 that XM will more than like start moving up in retails sales. We already know they have very good OEM deals. So, the question ends up being can XM rebound enough that they really will just allow SIRIUS to crash and burn? I also don't think that will happen either. I think before they go bankrupt or right after that you'll see a larger media company take them over. Again all this pure speculation, but that is my feeling. The merger arguement is an interesting one no doubt about it.
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Old 12-20-2006, 07:06 PM   #13
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Quote:
Originally Posted by Satradioman
I've been reading that statement a lot lately on all of the sat radio forums. If they merge what does Sirius have to offer XM besides a ton of debt? And XM's technology is superior so why would they merge?

Sirius has been kicking XM's ass the last few quarters, thats enough of a reason to merge. 2-3 years ago I was the number one believer that there's plenty of room for 2 sat radio companies. I no longer believe that, the landscape has changed. Ipods, etc. are eating XM's and Sirius's lunch, and the only out for Sirius and XM might be a merger. Sure XM could play the waiting game and wait for Sirius to fold, but Sirius might hang on long enough to make things hairy for XM. So to save themselves XM might be interested in a merger.

It's not to save themselves respectfully, it's to make a substantial profit. Both XM and Siri can scrape ground without going Chapter 11 forever ( both will go black 2008-2009 )...BUT they would never make a bloody thicke dime for many, many years.

A recent report suggest that 1.3 Billion can be bottome lined in 5 years with this merger. Do people understand that both companies combined would probably never make 1.3 Billion in profit until maybe 2014-2016 ?

I'm getting esoteric and off topic but it looks to me that a joined company would be worth 14-17 Billion in market cap the next day, and would go black the day after. Possibly turning a profit over 1.0 billion by 2009.
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Old 12-21-2006, 04:50 AM   #14
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Both XM and Siri can scrape ground without going Chapter 11 forever
I don't understand that statement. Forever?! Eventually any business thats not making money will run out of money and start missing payrolls, etc. Please clarify!
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Old 12-21-2006, 05:58 AM   #15
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Quote:
Originally Posted by Satradioman
I don't understand that statement. Forever?! Eventually any business thats not making money will run out of money and start missing payrolls, etc. Please clarify!
Both will be making small profits soon. I think ( IMHO) XM will go black Q2 2008 and Siri Q4 2008 or Q1 2009. Both have adequate resources for borrowing until they do. No one is going Chapter 11 ever based on today's trends. Those who think this could happen are simply not versed in business. Both companies passed the prospect of bankruptcy in the last 12-18 months.

1.75 - 2.25 million subs throw about 220 million bucks to the top line. ( It appears this will be the average sub add, per company, for year next year/s ) . As this comes in, the losses go down, when spending is reigned in. This is why XM showed such a good quarter in Q3 despite their abysmal growth.

Both companies now have their programming built and have started to conserve seeing that the easy money days are done.

The problem isn't them making a profit at this point, it's making a profit that was worthy of the substantial time and cost to build the business. Said another way, why invest and build a business if you could just put 3-4 billion bucks in long term notes and return 7-9-11% with minor risk ?

Every day and month and year that they fail to put dollars to the bottom line, is a day, month or year that the original investment could have been compounding interest on interest making the business model look sour.

This is why businesses have to go black quickly and return 12-20% to be respected by Wall Street. In 2006 when it was realized that this wasn't going to happen, Wall Street fled in masse.

-------------

A brief comparison on debt as it relates to a bankruptcy.

The average American has a 160K home that he/she owes 95K on. Revolving debt per household is about 18K. Income is 43K. Debt to income ratio is 2.6. Your pay raise may be 3.5% next year.

Siri 2007 income will be 830 million and will ( probably ) have 1.2-1.4 billion in debt by the end of 2007. A debt to income ratio of 1.5. Siri's " pay raise ( growth ) will be 25% for the next few years.

Sirius is by far healthier than most Americans.

Last edited by Whiskerbiscuit; 12-21-2006 at 10:02 AM..
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