SIRIUS SIGNS 421 FIRST-QUARTER SUBSCRIBERS—CLAYTON
Sirius Satellite Radio signed up only 421 subscribers in 4 introductory markets from Feb. 14 launch through March 31, CEO Joseph Clayton told financial analysts in conference call about first-quarter results. It was first reporting period in which Sirius posted actual operating revenue -- $34,000 from advertising, $4,000 from subscriptions.
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Roster of 421 subscribers seemed small in light of huge fanfare given recently to commercial launches by Sirius and rival XM Satellite Radio. But Clayton told analysts “I will remind you that this only includes the first 5 to 6 weeks of sales in extremely limited zip codes” in 4 test markets of Denver, Houston, Jackson, Miss., Phoenix. “Except for very limited initial promotional support in those markets, we have not done any additional advertising pending our national launch, and this will be the case through most of the 2nd quarter.” Additional subscribers in April-June quarter are expected to number “only several thousand,” Clayton said: “The clock really starts ticking for us on July 1” with start of national service availability, kickoff of national ad campaign and “improved” receiver availability.
Clayton said accelerated national rollout schedule was moving forward “according to plan.” Company will activate service in 10 additional states this week, increasing total to 28, growing to 38 by June 1, with remaining markets “going live” by July 1 target. Subscriber numbers will “start off slow” but are expected to grow “substantially” in year’s 2nd half and “especially in the 4th quarter, once we have nationwide coverage and additional product on the retail shelves.” Company still believes it can meet analysts’ consensus estimates of 100,000-150,000 subscribers by year- end, Clayton said.
New agreement with Daimler Chrysler announced Tues. will make Sirius radios widely available as dealer-installed option through Mopar parts division starting in fall, Clayton said. Deal also boosts specter of Sirius radios’ emerging as significant factory-installed option on Chrysler cars, also starting in fall. Clayton said Sirius was talking with other OEM partners on timing of their introduction plans.
Clayton said Sirius was on schedule to have receivers available on 3,500 retail floors by July 1 national rollout. Ramping up receiver production “continues to be our biggest challenge,” Clayton said. He said Kenwood was “redoubling” efforts to produce sufficient quantities of receivers, with target of 30,000 Kenwood units placed at retail by July 1 national rollout and more than 100,000 by year-end.
Sirius said first quarter loss applicable to common stockholders grew to $90.12 million vs. year-earlier loss of $64.42 million on $33,000 in revenue vs. none year earlier. Sales and marketing expenses jumped to $15.66 million from $4.97 million. Scelfo told analysts that subscriber activation costs, which were grouped under sales and marketing expenses, averaged $178 per subscriber and were within range of meeting analysts’ consensus projection of $155 for year.