XM Satellite Radio more than doubled its revenue and its
subscription revenue for the second quarter and said it projects it will have 6
million subscribers by the end of the year, up from its previous estimate of 5.5 million. Second quarter revenue was $125.5 million, up 136 percent from $53
million in the second three months of 2004.
For the second quarter, Sirius posted a net
loss per share of 13 cents, versus a loss of 11 cents in the same
period last year. Net subscriber additions were 365,931 for the
quarter, up 184% year-over-year, bringing the total number of
subscribers to 1,814,626 at the end of the quarter. Sirius increased
its 2005 subscriber guidance to 3 million from 2.7 million.
The increase in net loss per share likely means subscriber acquisition costs were higher. That seems to be the major negative weighing on Sirius and XM. But subscribers are a major asset that doesn't show up on the balance sheet. At this point no one would know how to value subscribers or determine the present value since the retention and lapse rates are a bit speculative.
My unscientific guess is that the retention rates will be high and the lapse rates low. This based simply on the fact that everyone (and at this point I mean everyone) I know who has either satellite service loves it. If retention rates are high, the value of those subscribers is going to be substantial. Anyone remember the early days of cable TV?
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