Directed Electronics & Sirius to split

Discussion in 'SiriusXM Soundwave Cafe' started by Wolf, Nov 5, 2008.

  1. Wolf

    Wolf The Lone Wolf

    Rumor: Directed Electronics & Sirius to split

    Rumor has it that Directed Electronics and Sirius XM Radio Inc. will be parting ways next year, Orbitcast has learned.

    DEI Holdings Inc. (formally Directed Electronics Inc.) will no longer be the satellite radio distribution source for Sirius, according to people familiar with the matter. The two companies are said to be splitting up once the contract runs out in January 2009, these people said.

    An official announcement is expected to be made sometime in the near future, possibly as soon as today. To date, official sources have not confirmed this information.

    UPDATE: The official press release was issued shortly after market close.

    Directed Electronics to Exit Satellite Radio Business

    * Focus to return exclusively to security and entertainment products

    * Company expects exit to result in recovery of working capital, reduction of debt, and increased gross margins

    VISTA, Calif., Nov. 5 /PRNewswire-FirstCall/ -- Directed Electronics, an operating unit of DEI Holdings, Inc. (NASDAQ : DEIX) , today announced that it has entered into an agreement with SIRIUS XM Radio outlining key terms for winding down their business together by January 31, 2009, the expiration date of the current distribution agreement.

    Jim Minarik, DEI Holdings' President and CEO stated, "We became the primary retail distribution partner for what was then SIRIUS SATELLITE RADIO in 2004, and are proud of the results we have achieved by growing SIRIUS' satellite radio retail share from approximately 20% to over 60% during the past four years. However, based on the large working capital commitment required for this business, as well as a strategic decision on our part to focus on our core security and entertainment businesses, we will not be extending our current agreement with SIRIUS XM when it expires on January 31, 2009. We have enjoyed an excellent partnership with SIRIUS over the past four years and expect to continue working closely with them to ensure the smoothest possible transition to their new distribution partner between now and early 2009."

    The agreement specifies that SIRIUS or its new distribution partner will purchase substantially all remaining satellite radio receiver inventory from Directed in the first quarter of 2009 and assume full responsibility for all product returns and warranty costs after January 31, 2009, regardless of when the product was sold.

    Mike Simmons, President of Directed Electronics said, "While our role as SIRIUS' primary retail partner over the past four years has benefited Directed, it has also diluted our team's focus on our core security and entertainment businesses, sold principally under our Viper, Python, Clifford, and Orion brand names. Going forward, we are excited to be able to once again dedicate 100% of our attention to improving the experience, service, and innovation we deliver to our customers."

    Kevin Duffy, DEI Holdings', CFO commented, "Exiting the satellite radio business will allow us to focus on our core categories and also increase our ability to pay down debt by recovering the $20 to $25 million of working capital we have committed to this business."
    Last edited: Nov 5, 2008
  2. DAB

    DAB Mod Emeritus

    This does not surpise me and it probably a good thing for Directed. I would imagine that Sirius will now partner with Delphi. I've never really been a big fan of Delphi either, but I have to say the latest Delphi XpressRC rocks totally!
  3. me_rubin

    me_rubin Member

    I just hope the radio's have some quality! I was not impressed with the quality of Directed products.
  4. MM

    MM Administrator

    This might be a good thing for us who like new toys, especially DAB.

    I am worried though, that they a new Stiletto line, if it stays around, will be different and I'll have to buy new docks, etc...

    I guess, as usual, we'll have to wait and see.
  5. HarleyJoel

    HarleyJoel Member

    Yes. QUALITY! Enough with the disposable radio's already!
  6. DAB

    DAB Mod Emeritus

    Well I wouldn't mind them going to an XM style radio, which is what it sounds like they are going to do. What would be great is if they come out with SIRIUS tuners that now works in existing XM docks. God knows I have enough of them around here. LOL
  7. TSS Taylor

    TSS Taylor DRC Fan

    The relationship between Directed and SIRIUS seems to be confusing to a lot. I think it's important people know that Directed only "makes" some of the accessories. They don't produce or much develop the Dock and Play or Portable Radios at all.

    SIRIUS has an engineering dept and they put together what they want produced. They work with the manufacturers, Wistron NeWeb, KiRyung, Humax, Zylux Acoustic, etc and others to make the products they require.

    Directed takes care of DISTRIBUTING these products and managing the relationships of ordering and warranty for the dealers and retailers who sell the products.

    So Directed isn't really a manufacturer of the Radios. They do help develop some of the accessories though. For example a lot of the cases for the Stilettos would have been a project that maybe Directed and SIRIUS worked on together.
    HarleyJoel likes this.
  8. ClubSteeler

    ClubSteeler Member

    Replacing Direct will be New Age.

    New Age lists partners such as, Belkin, Data Breaker, Canon, Compaq, Hewlett-Packard, JVC, Lexmark, Panasonic, Princeton, Samsung, and Sharp.

    Some pretty good companies in there, maybe some hope for new blood and higher quality and more competition in the hardware.......
  9. DAB

    DAB Mod Emeritus

    Good Info, thanks Club! :)
  10. mynameisjamie

    mynameisjamie Member

    I am really interested to see what kind of hardware would come out of this. If what Taylor says is true I suppose there shouldn't be much of a change in the radios. Also isn't there the opportunity for other companies to jump into the fray by making their own satellite radios due to the merger? For example if a company like Sony so chooses couldn't they start making a line of satellite radios?
  11. TSS Taylor

    TSS Taylor DRC Fan

    I'm pretty sure what will happen come January 31 when Directed stops their relationship with SIRIUS is that all of SIRIUS' inventory that Directed ships out for them will be moved to the new Distributor. So now all the Sportster 5s, and Stiletto 2s will instead be shipped out from the new place. Maybe some new radios will come out in the first half of next year and I'm sure the new distributor will be in charge of taking control of the distribution process on those.

    It's certainly complicated how everything works but a Sportster 5 (for example) is part of SIRIUS' inventory that was developed and engineered through SIRIUS, with a chipset provided by one manufacturer, put together and assembled in another factory. Distributed and shipped to Directed Electronics who ends up distributing to various retail outlets and assists with the Warranty.
  12. DoublEE

    DoublEE Active Member

    No real loss. Directed's radios were mostly garbage.:idunno:
  13. me_rubin

    me_rubin Member

    Agreed! Can't wait until we have somthing new next year. I don't know why they can't get apple to build one that has Sirius XM. I bet if they did, the stock would go up!
  14. TulaneJeff

    TulaneJeff Member

    I wonder if Xact (US Electronics) will step back in the sat radio field, once OpenAccess goes in to effect.

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