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XM/GM Meet Ends on Positive Note

1144 Views 0 Replies 1 Participant Last post by  Steve Mehs
General Motors and XM Satellite Radio held a meeting last week highlighting the rollout of the digital radio service by the auto giant, a gathering described by analysts as positive.

Said Armand Musey of Salomon Smith Barney, "We left this meeting with the impression that GM's support for XM is significant." Musey also noted in a research piece that GM has invested $200 million and spent three years planning for the rollout of XM service.

Among the key items surfacing at the meeting: GM is supporting XM's rollout with a "fast start" program that will last through November that includes a $325 equipment subsidy for automobile dealers and a $200 bonus given to sales personnel for each subscriber activated, as well as some consumer subsidies.

Musey said GM's support bodes well for XM, "and that a solid follow through from GM in 2004 and 2005 would validate XM's business model and our valuation." Despite the positive news, Musey said he expects XM shares to be weak in the near-term due to concerns about dilution from its next round of financing. XM shares are rated by Salomon Smith Barney as 1S (Outperform, Speculative) relative to the firm's satellite communications group.

From SkyReport (Used with Permission)
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