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NPD: Sat Radio Growth Slows in May

6/22/2006 09:21:00 AM Eastern

Port Washington, N.Y. — Satellite Radio retail sales growth slowed in May to one of its lowest monthly levels since the inception of the service in 2001, according to new data from The NPD Group, based here.

Unit sales increased only 6.1 percent year-over-year, while monthly growth in retail sales earlier in the year was in the high double-digits, closer to 40 percent.

XM Satellite Radio did not respond to TWICE inquiries on May retail growth. A Sirius spokesman noted only that Sirius recently raised its year-end subscribers guidance, from 6 million, to 6.2 million.

Industry members pointed out that XM has already adjusted its sales downward by 500,000 subscribers for 2006 and that the May NPD results may reflect temporary issues such as the delay of the much anticipated wearable MP3 radios from XM — the Pioneer Inno, which is now shipping, and Samsung Helix that hits stores at the end of June.

Analyst April Horace of Hoefer & Arnett, San Francisco, said, “May isn’t really a month that is necessarily indicative of the rest of the quarter. When it comes to the second quarter, what people should focus on is Dad’s day, and that was the in the middle of June.”

She noted, however, that XM has “experienced some lows and a streak of bad luck,” pointing to delayed shipments of the Inno and Helix and the recent inquiries into XM products by the Federal Communications Commission.

Horace said XM OEM subscribers sales should increase dramatically in the fourth quarter and first quarter of 2007, when XM’s plans to factory-install radios in vehicles from Hyundai, Nissan and Toyota go into effect.

XM lowered its guidance in April from 9 million subscribers by the end of the year, to 8.5 million.Horace said, “There’s some rumblings of it being 8.1 million, but in the overall long-term scheme of things, it’s immaterial. The goal is 20 million [subscribers] by 2010.”