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Mel's Accounting

From Inside Radio, Fridao, 9-15-06
Nearly 500,000 Sirius subscribers are actually empty cars on the dealer lots.Sirius CFO David Frear defends the practice of counting cars on dealer lots as subscribers and tells the Merrill Lynch confab in Pasadena that "it's not a very big number"1 and it's "dropping as a percentage of subscribers" over the past year from 10% to about 8%.
1Interpretation: We're playing with the numbers, but everybody does it, and it's just a little white lie, not a big lie. Sure... whatever you say. So when Mel was doing his usual Wall Street Dance undermining XM, Sirius was just as guilty. Oh that Mel, what a hoot!
 
I'm not going to say it's right or wrong, but I will say that I agree it's pretty common. Also, at least in theory, this will balance itself out. When the cars are sold, the people will either take the service and stay subscribers and will be written off if/when they cancel, or they will pass and be taken out of the subscriber count.

As an example, a toy company (I can't remember the name off the top of my head, but it's one we've heard of) counts its toys as sold the second they leave their loading docks. They also have their fiscal year end December 31. So, what do you think they do right before Thanksgiving? They pack the trucks that haul their product. This inflates their Q4 results. However, they have more returns as toy stores either refused the toys they didn't order or send back the ones they failed to sell. Something that's also quite common is fewer toys sold immediately after Christmas because the toy stores buy fewer toys due to being overstocked when the company tried to backload its sales. The result is a soft Q1. The inflated Q4 is balanced by the softer Q1. Something similar should happen with satellite radio, too.
 
heres a link to the reported numbers on a quarterly basis
http://investor.sirius.com/downloads/data.pdf

the total new oem subs, added from the end of the first quarter of 06 through june,were only 324,574 the eight percent should be based on that number, which is only roughly 26k

even if you use the last reported total oem number for sirius, which is 1,373,610 at eight percent its still only 109k

how did you reach 500k ?
 
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