Consumers are reigning in their spending: on $5 lattes, $50 shoes, $1,500 laptops, and really big-ticket items like cars.
That's a problem for Sirius XM Radio. Although Sirius XM's subscriber base grew by 17 percent over the past year, the company expects sluggish growth in 2009 on account of a dramatic slowdown in auto sales. Also of note in the company's earnings report released Monday was a nearly $5 billion loss related to its acquisition of XM in July.
The problem is that Sirius XM draws in most of its new customers through sales of cars with built-in satellite radios, and autos are facing a massive sales slump. The best way to describe the situation? It sucks. That's what CEO Mel Karmazin on a conference call with analysts:
"We think the environment sucks. It is not like we're doing something wrong. It is that, unfortunately, we do not have a whole lot of control over what cars are getting sold. We do our best."
And in September, Karmazin said at an investor conference: "The reason why radio sucks, and the reason that most of you don't want to invest in it is principally because the growth stopped."
Jamie Dlugosch of BloggingStocks muses about how Sirius could operate in a normal economy, but says today, investors are focused on the company's ability to repay its debt. To investors, he says: "If you own, keep holding. There is nothing to gain by selling at this point. If they're going down, they're going down."
The stock is trading around 25 cents today.
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