UPDATE 2-Sirius sees more savings, sub growth disappoints
(Adds forecast details)
NEW YORK, Sept 9 (Reuters) - Sirius XM Radio (SIRI.O) forecast revenue and subscriber growth for 2009 that were short of some analysts' expectations, driving its shares down more than 11 percent to an historical low on Tuesday.
In the first forecast since its satellite radio merger closed in July, Sirius XM said it expected to have 19.5 million subscribers by the end of 2008, and about 21.5 million subscribers by the end of 2009.
The forecast fell short of several analysts' views, including that of Janco Partners analyst April Horace, who had expected about 23 million subscribers in 2009, up from the 18.5 million when the merger was completed. Some analysts had seen subscribers as high as 24 million.
The news reflected analysts' concerns that during 17 months for Sirius and XM to get regulatory approval for their deal, interest in satellite radio may have waned.
While the company lifted its cost-savings estimates, those savings do not appear to yield improved earnings, analysts said, citing slower-than-expected subscriber growth.
By cutting executives and advertising, and consolidating sales and programming systems, Sirius XM now expects to save $425 million in 2009, up from its previous estimate of $400 million.
"We are taking cost out of the organization every single day," Sirius XM Chief Executive Mel Karmazin said at a Merrill Lynch conference that was broadcast on the Internet.
But, the company still expects to post an adjusted loss before interest, tax, depreciation and amortization of $350 million this year, and left its forecast for 2009 EBITDA earnings at $300 million.
"Subscriber outlook looks low," said Janco Partners' Horace. "Sirius increased synergies, but EBITDA stayed flat."
"VERY CONSERVATIVE" OUTLOOK
Karmazin said the forecast was "very, very conservative." He expected market fundamentals to shift in coming months, with a resurgence of demand from users who buy radios on their own, also called the "aftermarket", as opposed to radios built into new cars.
Aftermarket demand slumped during the merger process, a problem attributed in part to consumers' confusion over which service would still work after the deal was done.
"The aftermarket confusion is gone. We think that there is going to be an aftermarket starting in the fourth quarter," he said at the Merrill conference.
Sirius XM shares closed at a new low of $1.14 on Nasdaq, where it was the second-most active stock. Continued...
