Zacks Investment Research has cut its stock recommendation on Sirius XM to “Underperform.” It is worried about new competition.
Zacks cited the deal by Pandora to have Pioneer sell a navigation and entertainment for in-dash use which will include allowing Pandora users who stream the service on their Apple iPhones to easily access Pandora in their cars.
“Despite being a virtual monopoly in the satellite radio market, Sirius XM faces significant competition. Recently, Pioneer System, a leading car information system manufacturer, unveiled a new car stereo called “AVIC-X920BT” that supports Internet radio. This new product can detect Pandora Internet radio settings from Apple Inc’s iPhones or iPods that can be translated into convenient access to create customized music stations for individual users while driving. Pioneer will start selling this product from March 2010,” Zacks noted.
The independent research firm also noted that Sirius XM is heavily dependent on automakers for new subscribers and has been hit by the downturn in new car sales.
RBR-TVBR observation: We’ve said for years that Internet streaming in cars – once it becomes widely available and affordable – will present problems (but also opportunities) for AM and FM radio, but deliver a death blow to satellite radio. It won’t happen in the next year or two, but Zacks appears to agree that the handwriting is on the wall.