Sirius XM Holdings Inc. (NASDAQ:SIRI) has officially announced that it will release the results from the first quarter of 2014 on April 24. The company plans to hold the conference call at 8 a.m. Eastern on that day to talk about those results. Those who are interested in listening to the conference call can do so via the company’s website.
Sirius shares down, then up, then down
On Wednesday, Sirius XM Holdings Inc. (NASDAQ:SIRI) shares rose more than 3% after the deal with Avis Budget Group Inc. (NASDAQ:CAR) was announced. That increase came after a steady decline which was caused by Liberty Media Corp (NASDAQ:LMCA) (NASDAQ:LMCB)’s announcement that it no longer wanted the other part of Sirius XM which it doesn’t own. The fact that Liberty Media shareholders were so happy about this shows just how much of a pickle Sirius is in.
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Meanwhile analysts have generally remained bullish on Sirius XM Holdings Inc. (NASDAQ:SIRI), and investors breathed a sigh of relief regarding the deal with Avis Budget Group Inc. (NASDAQ:CAR).
Sirius’ deal with Avis isn’t a big deal
Today’s decline may in part be due to an article by Richard Saintvilus which is posted on The Street. He argues that the deal with Avis Budget Group Inc. (NASDAQ:CAR) isn’t a big deal at all, even though renters of about 60% of Avis’ vehicles will have access to Sirius’ services.
He notes that Sirius XM Holdings Inc. (NASDAQ:SIRI) will offer it as a premium add-on, meaning customers will have to pay for it. It comes with a $6.99 fee for the first day of the rental and $3.99 each day after that. The fee gets tacked onto what customers are paying to rent the car in the first place.
He also notes that this sort of deal isn’t really new because Sirius XM Holdings Inc. (NASDAQ:SIRI)has had deals with car rental companies for years, like the one it has with Hertz Global Holdings, Inc. (NYSE:HTZ). In fact, the setup is similar, with a $6.99 charge for the first day of Sirius in a rental car. Where it differs though is the fact that the price is the same for each day when signing up for Sirius through Hertz. In addition, the fee through Avis Budget Group Inc. (NASDAQ:CAR) is capped at $19.99 if the car is rented for a whole week, but this isn’t true under the deal with Hertz.
Sirius needs another source of revenue
Saintvilus states that Sirius XM Holdings Inc. (NASDAQ:SIRI)’s revenue stream continues to be tied to the car and that it must find a way to generate revenue which doesn’t require a car. The market is becoming increasingly crowded with bigger players than Sirius, like Apple Inc. (NASDAQ:AAPL) and Pandora Media Inc (NYSE:P).
He doesn’t think the deal with Avis Budget Group Inc. (NASDAQ:CAR) will be enough for Sirius XM Holdings Inc. (NASDAQ:SIRI), and he’s probably right. The company is going to have to up its game and start thinking beyond the car.