Better days ahead for Sirius XM?
Sirius XM Radio has reason to be excited about the success of the cash for clunkers program. The satellite radio operator, which posted quarterly results this morning, raised its income outlook for the year on a potential rebound in car sales.
Chief Executive Mel Karmazin said on the earnings call that he was cautiously optimistic that auto industry sales will pick up in the second half of this year.
After all, any increase in car sales translates into more subscribers for Sirius XM, which gets most of its new users from satellite radios built into cars.
Investors have been optimistic about Sirius’s stock all this week, given the launch of its iPhone software and the government’s Car Allowance Rebate System, which lets people trade in their old vehicles for rebates on new, fuel-efficient cars. Reuters’ Franklin Paul wrote on Tuesday:
The U.S. government’s popular “cash for clunkers” incentive program has added spark to the idea that auto sales may rebound after a four-year decline. By allowing people to trade in old vehicles, the program has lifted industry-wide sales back above 11 million units on an annualized basis.
What’s more, Barrington Research analyst James Goss told Paul that Sirius converts about half of its users who get trial accounts when they buy a car into paying customers.
Now, only time will tell whether the optimism lasts, both in the beleaguered U.S. car industry and among Sirius shareholders.
Keep an eye on:
- How Netflix gets your movies to your mailbox so fast. (Chicago Tribune)
- Falling terminal sales have prompted Bloomberg to make one-off payments to staff. (Financial Times)
- Thomson Reuters posts a better-than-expected quarterly profit. (Reuters)
Photo: Sirius XM CEO Mel Karmazin/Reuters