The recording feature of the satellite service’s new radios has drawn a double whammy: A lawsuit and the threat of legislative action
XM Satellite Radio (XMSR) has faced plenty of static in its short life. Questions about whether its technology will work as billed. Doubts about whether there’s a substantial enough audience for its $12.95-a-month service. Competition from rival Sirius Satellite Radio (SIRI), where shock jock Howard Stern has attracted his enthusiastic flock.
Source: http://www.businessweek.com/technology/content/jun2006/tc20060621_591400.htm
XM Satellite Radio has applied for a patent to broadcast its signal into new HD Radios. Instead of XM using the FM band to receive signals in a car, using new HD Radio frequencies would allow the signal to be preserved as a higher-quality digital signal as it is intended, instead of in analog.
With the new technology, XM’s signal would be sent via an IBOC (in-band over carrier) digital audio broadcast. The patent also allows for MP3s, CDs and other audio options to be sent to HD Radios as well.
In the patent application, the company notes that its “high quality digital signal broadcast by XM Satellite Radio is ideally received by a digital satellite receiver for best audio reproduction, but in many instances an analog frequency modulation technique is utilized to reproduce the digital signal to take advantage of existing FM receiver car audio hardware.” The entire patent application can be read here as a PDF.
Retail demand for satellite radio has slowed recently due in part to high gas prices and deflating hype surrounding ribald radio jockey Howard Stern, according to a new report from Banc of America Securities.
“The ‘true’ growth trajectory is more modest than was implied post first-quarter results,” Banc of America analyst Jonathan Jacoby wrote in a report Monday.
Other factors include lack of ads, products delays and slower MP3 demand.
Jacoby cautioned, however, that just because satellite radio’s retail demand has slackened doesn’t mean that market penetration will ultimately dry up.
That could still be the result, but it’s more indicative of a slower buildup than previously expected, according to the analyst.
Year-over-year satellite radio growth has slowed to 6% in May and 9% in April, down from 26% in March.
These statistics don’t include Wal-Mart (nyse: WMT - news - people ) or direct sales, but still represent a considerable slowdown from the 50% to 100% year-over-year improvements that were the norm during 2005, according to Jacoby.
He now projects the OEM channel to comprise 59% of gross ads, in contrast to his prior estimate of 52%.
Jacoby lowered the price target from Sirius Satellite Radio (nasdaq: SIRI - news - people ) to $4.50 from $5, but said the “implied upside” of the new target is still “relatively modest at 17%.”
The analyst’s new price target for XM Satellite Radio (nasdaq: XMSR - news - people ) is $22, down from $25 – an implied return potential of 70%.
Source: Forbes