This is a continuation of the Series Looking at the Bear Stearns upgrade of Sirius by Robert Peck. In post 1 of the series I covered the Washington Attitude. Post 2 detailed Liquidity. This post will focus on Aftermarket Subscribers:
Robert Peck of Bear Stearns projects the Aftermarket (retail) component of Sirius to be at about 30% by the end of 2010. Their analysis accounts for a 25% decline in gross additions at retail for 2007, a 20% decline in 2008, and a 10% decline per year from there through 2013. Bear in mind that these percentage declines are NOT aggregate (do not add up the percentages). Throughout this period Peck feels that Sirius will carry 55% of the retail market.
Peck states that his model is conservative, and that Sirius noted that they are anticipating overall sector retail gross additions to remain stable at about 4,000,000 per year. Pecks overall thesis for the retail numbers centers strongly on the fact that satellite radio is becoming more widely available in the OEM channel, and penetration in the OEM channel will continue to grow.
Peck states that by 2013, he is estimating 4.4 million after-market subscribers, which is projected to decline from the peak of 5.2 million in 2009, and represent about 30% of the total subscriber base in 2013.
Thus, as compared to a declining retail segment, a point that many seem to feel is happening (in part due to tough year over year comparisons due to Howard stern), it is very likely that this sector will see stable retail, while OEM grows. The more portable the product (or subscription), the more likely that a retail radio will be a better seller in the market.
Look for more analysis of the Bear Stearns Report here at Sirius Buzz.
Position – Long Sirius, Long XM