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XM Satellite Radio wasted no time in responding to an analyst downgrade tied to concerns about the health of its satellites.
SoundView Technology analyst Tim O'Neil cut his rating on XM to "underperform" from "strong buy," and lowered his price target on the stock to $9 from $20 on Monday. He said there is some uncertainty related to the performance of XM's satellites and whether insurance providers would cover losses associated with any anomalies aboard the spacecraft.
In September, XM was notified by Boeing about a degradation problem with solar arrays on 702 class satellites. At that time, XM said its two satellites, both 702 models, were delivered above power specification. The company also said that projections from available data suggested the satellites should not fall below specification before the latter half of the decade.
XM said both satellites continue to perform above specifications, and projections of future performance have not changed. As reported, Boeing developed a fix for the problem for 702s currently under construction, including XM's ground spare.
"As one would expect, since that announcement, we have been in discussions with Boeing and other manufacturers regarding modifications to our current ground spare and other long lead contingency options," XM said. "Press reports of those discussions caused one analyst to speculate that the satellites were experiencing even faster than anticipated degradation. This is not true. Observed power output levels from XM's satellites are trending consistent with prior projections and disclosures."
XM said it has not filed an insurance claim to date, but did advise insurance carriers last September about the situation and the potential for a future claim of loss, all of which was information previously disclosed, the company said.
From http://www.skyreport.com (Used with permission)
SoundView Technology analyst Tim O'Neil cut his rating on XM to "underperform" from "strong buy," and lowered his price target on the stock to $9 from $20 on Monday. He said there is some uncertainty related to the performance of XM's satellites and whether insurance providers would cover losses associated with any anomalies aboard the spacecraft.
In September, XM was notified by Boeing about a degradation problem with solar arrays on 702 class satellites. At that time, XM said its two satellites, both 702 models, were delivered above power specification. The company also said that projections from available data suggested the satellites should not fall below specification before the latter half of the decade.
XM said both satellites continue to perform above specifications, and projections of future performance have not changed. As reported, Boeing developed a fix for the problem for 702s currently under construction, including XM's ground spare.
"As one would expect, since that announcement, we have been in discussions with Boeing and other manufacturers regarding modifications to our current ground spare and other long lead contingency options," XM said. "Press reports of those discussions caused one analyst to speculate that the satellites were experiencing even faster than anticipated degradation. This is not true. Observed power output levels from XM's satellites are trending consistent with prior projections and disclosures."
XM said it has not filed an insurance claim to date, but did advise insurance carriers last September about the situation and the potential for a future claim of loss, all of which was information previously disclosed, the company said.
From http://www.skyreport.com (Used with permission)
