Shares of XM, Sirius Plunge After Negative Analyst Report

Authored by Mark Hefflinger on June 19, 2008 - 7:42am.

Washington - As momentum builds toward the completion of their multi-billion dollar merger, shares of DC-based XM Satellite Radio (NASD: XMSR) and New York-based Sirius (NASD: SIRI) tumbled on Thursday following an analyst report that questioned the very future of satellite radio. Goldman Sachs analyst Mark Wienkes cited a dramatic slowdown in subscriber growth, with younger consumers buying alternatives such as MP3 players and iPhones.

He forecast larger losses for both companies over the next two years, cutting his price target for XM from $11.50 to $6.50 and Sirius from $2.25 to $1.75.

"With core demand for satellite radio falling amongst the younger demographics...we see long-term risk to the outlook," said Wienkes in a research note.

The news, which came three days after FCC Chairman Kevin Martin said that he would recommend the approval of the companies' merger, sent shares of XM down 16% and shares of Sirius down 11% by midday Thursday.

 

Related Links:
http://biz.yahoo.com/ap/080619/sirius_satellite_radio_out_of_the_gate.html

http://snipurl.com/2l8gt (Fortune)

http://snipurl.com/2l8h4 (Reuters)



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