The majority of new subscribers to satellite radio during the first quarter of 2007 signed on with Sirius, according to that company's CEO, Mel Karmazin. Kamazin, speaking on Sirius' quarterly results teleconference to Wall Street analysts Tuesday reported Sirius had nabbed 66% of the consumer market signing up for satellite radio for the sixth consecutive quarter, while taking 76% of the retail market and 62% of the new vehicle market.

Kamazin says the original equipment manufacturers, or OEM as the new vehicle market is called, is expected to be a major growth area for Sirius in the coming years as Lincoln, Audi, Land Rover, Mitsubshi, Mini-Cooper and Mercedes-Benz have all recently expanded their commitment to including Sirius receivers in various models.

"Our OEM partners are dramatically ramping up the number of vehicles in which our service is included," Karmazin said. For instance, he pointed out that Mercedes is offering Sirius in 80% of the 2007 models, 90% of its 2008 line, and more than 90% in its 2009 models.

"We are the fastest growing radio company in the United States," Karmazin added.

Subscriber churn is 2.3%, in the middle range of what Sirius had forecast in its 2007 guidance, Karmazin said. He added that the company is on target to meet its forecast of ending the year with more than 8 million subscribers. "We had a solid first quarter and demand for Sirius continues to be strong and our financial performance is on track."

He did, however, acknowledge that advertising sales were off during the first quarter but explained that Howard Stern's arrival in January 2006 was primarily "responsible for a significant amount of ad revenue" then and Stern had, as part of his contract, agreed to take no vacation during the first quarter and no Friday's off, as is part of his deal. Karmazin said that second quarter ad sales are currently pacing about 20% over last year.

But Sirius' performance wasn't all that impressive to Bank of America Securities media analyst Jonathan Jacoby. Wall Street's well-known XM cheerleader, who has a "neutral" rating and $2.75, 12-month target price on the stock, had a "mixed to negative" reaction to the first quarter results. In a note to investors, the analyst observed that "subscriber net adds of 556,000 easily topped our estimate of 461,000 and the Street consensus of 505,000. However, the source of the beat was the OEM channel (retail net adds were only 14,000 higher than our estimate)."

Jacoby also shook his finger at the satcaster because it "counts subscribers at the time of vehicle production rather than the time of sale, this," said Jacoby, "suggests the biggest boost to the sub base in Q1 has come from 'car-lot' subs. Further, Sirius did not raise its guidance for more than 8 million subscriptions at year-end, suggesting only modest upside (200,000, or 5%) to our year-end sub estimate of 8 million."