Automotive Mobile Audio Video

I attend the Consumer Electronics Show (CES) in Las Vegas each January, not to escape New Hampshire winters, but to spot trends that might influence the OEM market for electronics. The mobile electronics after-market, smaller and much more flexible than the OEM market for auto electronics, can respond to consumer demand years faster. Usually at CES, one or two hot new mobile electronics aftermarket products stand out. Over the last three years, aftermarket suppliers have ballyhooed satellite radio, HD radio (formerly known as BOO for in-band-on-channel radio), video entertainment systems and surround sound.

At CES 2003, nothing much was new. Like last year, navigation and telematics were nowhere in sight. A special telematics exhibition and conference sponsored by Telematics Update drew little enthusiasm. Satellite radio broadcasters XM Radio and Sirius Satellite Radio each put on large, noisy exhibits, though sales have not yet hit it big enough to say for certain that the satellite radio business will be a success. The coldest product during 2002, according to several top after-market executives, was multi-disc CD changers, which until last year had been selling quite well.

Today the fastest-growing mobile electronics product in the U.S. aftermarket is rear-seat video entertainment. U.S. mobile video factory sales grew 62 percent in 2002, to roughly $419 million, according to CEA market research. Mobile video, or rearseat entertainment systems, include standalone monitors, overhead and seat-back monitors, overhead consoles, video cassette players, DVD players and TV tuners. Rear-seat entertainment is also cooking on the OEM side of the business. According to the January 16 Wall Street Journal, eight 2003 vehicle models in the U.S. come with standard DVD players, plus the feature is available as an option on 70 models.

Satellite Radio Poised for Growth

It has taken 13 years and billions of dollars for the two satellite radio broadcasters to get up and running. From the time they began operating through mid-year 2002, XM Radio raised a total of $1.5 billion in equity and debt, while Sirius raised $1.89 billion. That money has largely been spent. Because expenses are high and sales have not yet blossomed enough to produce profits, both companies have been strapped for cash, especially Sirius.

Sirius says it picked up a total of 30,000 subscribers as of year-end 2002, while XM Radio, which had been carefully watching the recent Christmas selling season, signed up 145,000 new subscribers in the fourth quarter of 2002, bringing the total number of XM subscribers by year-end 2002 to 347,000. A large part of XM's Christmas sales can be attributed to SkyFi, a new portable satellite radio from Delphi that can be used in the car or in the home. Delphi built 100,000 SkyFi radios in the latter part of 2002, 97,000 of which were sold to consumers before yearend 2002. Each radio sale brings in an XM Radio subscription, and XM now says it expects to have one million subscribers by the end of 2003.

On January 13, 2003, Sirius, which otherwise would run out of cash at the end of the second quarter 2003, filed an application to voluntarily exchange all debt securities, worth about $696 million, for common stock priced at $1.28 per share. On January 17, 2003, Sirius stock was trading at $1.37 per share, significantly down from a 52-week high of $8.14 per share. According to a company press release, Sirius will file a pre-packaged bankruptcy plan as a failback position should it fail to convert the required number of bond holders during the recapitalization process. We should know by mid-2003 whether Sirius will be able to recapitalize voluntarily or, f that fails, do so through bankruptcy proceedings.

# posted by Medical Information : 2:41 AM