As we all know, Sirius XM has guided to $350 in positive adjusted EBITDA in 2009. This news was well received by all.
the warning is that these figures are based on annualized sales of 9 million cars in the OEM channel. Right now the annualized pace in the OEM channel is 10 million.
Yes, the more cars that sell, the bigger the sub number will be, but these installations have a COST side as well.
if annualized sales recover, and appraoch 11 million, Sirius XM will be laying out cash to pay for installations. This needs to be considered. the OEM channel costs money to participate in, and investors need to bear in mind those costs.
This is not to say that more car sales is a bad thing. It it to get people to better understand the dynamics of the OEM channel, and how cash and other metrics are impacted.
i am not saying that the $350 million guidance will fall by the wayside. What I am saying is that if it does, one main factor will be a bigger ramp in the OEM channel because car sales are recovering.
In the same way that slow car sales are good for SIRI in the short term, but bad in the long term, Quickly improving car sales can be bad short term but good long term. Investors simply need to be prepared and pay attention to the OEM channel.