Coming out a day after the flood of analyst reports hit the street, Barrington has issued their take on the quarter as well as the merger. The form feels that given that the DOJ has approved the merger, that the FCC will follow suit. Timeframe is still an unknown, but the analyst feels that should the merger not gain FCC approval that Sirius is better positioned than XM. Of course, this is but one opinion among many. Barrington carries a Outperform on Sirius with a price target of $3.50 and a Market perform on XM with no price target.
This analyst like many others sees the OEM picture as the main subscriber contributor in the quarter. Q2 will offer the first real retail quarter of 2008. All in Retail in SDARS is negative (49,000) for the year. Fathers Day is typically a boost for SDARS, and both Sirius and XM have substantial campaigns in place to help consumers spend their government stimulus checks for Dad's and Grad's.
In my opinion, should the merger be approved, it is possible that we see a reemergence on retail as soon as A-La-Carte radios become available. Those who have been waiting to upgrade may well want the radios with the additional capabilities. Investors should be cautioned that having good retail sales does not necessarily translate to subscribers. Upgrades for existing subscribers will mean a retail sale, but will not add to the subscriber numbers.
As stand alones, each company has their stronger and weaker metrics. If the merger is not approved, it will be a renewed race out of the gate to reestablish market position.
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Position - Long Sirius, XM.