WorldSpace Appoints A R Rahman As Brand Ambassador; India Looks Good But Analysts Divided
By Sahad PV - Wed 29 Mar 2006 02:03 PM PST
WorldSpace has appointed music genious A R Rahman as the brand ambassador. That’s a good move for a company that has been growing at a frenetic pace in India. Out of 115,000 subscribers, it has 75,000 from India. And Indian subscriber base is growing at 100 per cent for the company. But the problem is Indian market is very price sensitive. Unless the digital radio service expands its reach, WorldSapce will have a problem in getting the required revenue numbers.
Good or Bad?
So analysts are still divided over the propsects for WorldSpace (trading on Nasdaq). Last week, a UBS analyst recommended a “buy” on WorldSpace’s shares, which have been tumbling ever since it went in for an IPO last year. The stock has traded between $5.86 and $26 over the past 52 weeks. A week before, SG Cowen & Co. analyst Tom Watts had downgraded it to “Neutral” from “Buy,” citing increased risks.
Here is another analysis of WorldSpace stock, which says “that things at Worldspace look really bad”. The cost to run Worldspace based on Q4 number is about $140 million per annum. But it had barely generated $4.4 million in revenues in Q4. That means revenues have to grow 35x to cover costs, says an analyst in Media Stock Blog
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