Wall Street Analysis

Industry stocks largely fell along with the rest of the stock market last week. The Satellite News stock index for the period between Aug. 6 and Aug. 12 showed that Englewood, Colo.-based EchoStar Communications [DISH] was one of the few bright spots. EchoStar’s good second quarter 2004 results announced last week buoyed its outlook.

One industry player with a stock price that slipped more than expected was New York City-based Sirius Satellite Radio [SIRI]. Sirius slid 11.6 percent last week, and it’s down 34.9 percent for the past three months. Short-selling from professional investors who are unloading the stock with the intent of buying it back later at a cheaper price likely is driving part of this trend. There also has been little news to compel investors to buy Sirius lately. The company needed more than an additional week in July to hit its end-of-June goal of 50,000 total subscribers.

Sirius CEO David Frear told me last week that he’s not aware of any reason his company’s stock would have fallen, other than the general market retreat. Radio industry stocks overall fell more than the market average, Wall Street observers said. Rival XM Satellite Radio [XMSR] was a notable exception, because it rose a modest 2 percent.

“The market as a whole is just not doing well these days,” Frear said. Interest rates ticked up last week and trading has been light, as traditionally occurs in late summer, he explained. Once school is back in session and retail sales begin their seasonal rise this fall, the situation may change.

Sirius appears to be gearing up for fall with new product rollouts. Last Thursday, it announced the introduction of a palm-sized plug & play unit that can be used at home or in a car. To add marketing buzz, the company opted to unveil it on the Home Shopping Network Aug. 14.

Another catalyst for Sirius could be airing of all the NFL regular season and playoff games starting this fall. If Sirius signs up at least 2,200 subscribers per team during each of the next seven years, the company will be able to cover the $220 million price it must pay the NFL for broadcasting the games on its national service. Sirius is only required to pay $5 million of that backloaded contract this year.

Clearly, the term “dog days” of summer also can apply to the stock market.

Paul Dykewicz is senior editor and senior analyst of Satellite News. He can be reached at 301/354-1769 or at [email protected].