SIRI & XMSR

This week, Sirius Satellite Radio and XM Satellite Radio offered what appeared to be positive announcements related to their respective businesses. While the news was well received by at least one Wall Street analyst, both stocks took a bit of a hit on the trading floor.

Sirius announced June 6 that its exclusive relationship with Ford Motor Co. has been extended through September 2011. The agreement covers all Ford brands in the United States. Ford said that by 2008, about 90 percent of Ford and Lincoln Mercury vehicles would have Sirius receivers as a factory-installed option.

Bear Stearns Analyst Robert Peck said in a June 7 equity report that the agreement “alleviates concerns about Ford switching to XM in the near-term or Sirius having to sweeten the terms. Over the longer term, we think it is imperative for Sirius to deliver on technology development milestones given Ford’s option to become non-exclusive in January 2009.”

Meanwhile, XM reported in a filing with the U.S. Securities and Exchange Commission that it sold 9.6 million shares of common stock, raising gross proceeds of $300 million. Peck speculated in a June 9 research report that some of the proceeds could be used to accelerate the launch of the XM-4 spacecraft being manufactured by Boeing Co. “We think the company could launch the XM-4 satellite earlier than the previously planned 2007-2008 timeframe, and potentially as soon as 2006.”

XM-4 potentially could provide stronger signals that will boost the reception capability for XM’s portable devices. “The proceeds are not being utilized to fund programming expenses, which has been a concern in the past,” Peck said. “Rather, spending to increase market size (and its market share) bodes well for the stock over the long term.”

Despite some positive reaction to the moves, both Sirius and XM have been moving down this week. On June 2, Sirius was at $6 per share. It held that closing price June 3 before inching down four successive days before closing at $5.76 June 9. XM closed June 2 at $34.02 and then hit a downward slide, also closing down every day to fall to $31.31 by June 9.

ORB

With no new news regarding the investigation of Orbital Sciences Corp., the company’s stock continued it slow recovery back to the level it held before the investigation into Orbital’s launch vehicle contracting procedures by the U.S. government was revealed (SN, May 30; June 3). On May 26, the day before the investigation was announced, Orbital closed at $10.57. It dropped to $9.66 May 27, but the stock has been moving back toward its May 26 level. The stock closed at $10.33 June 9.

PA & NSE

Panamsat continued its rise, breaking the $20 mark this week when the stock closed at $20.03 June 7. It followed that up with two more historic highs in its next two trading days, closing at $20.15 June 8 and $20.20 June 9. With no new news coming from Panamsat, this appears to be a good indicator of investor confidence in the company.

New Skies, however, is not mirroring Panamsat’s steady climb. The company emerged from its 25-day quiet period following its May 10 initial public offering (SN, May 16). While New Skies has not made any announcements since the end of the quiet period, the stock hit a high of $18.09 June 3 before closing lower each of the next three trading days. It closed the review period leading up to our publication deadline moving back in an upward direction, closing June 9 at $17.93. Like Panamsat before it, the first test for New Skis will come when the company releases its first quarterly report. In the meantime, look for an interview with New Skies CEO Daniel Goldberg in the coming weeks of Satellite News.