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No. of Recommendations: 11
I just dont understand it. XM recieves bad news that it is going to court, SIRI drops. XM recieves good news that it renewed two contracts, SIRI drops.

Did anyone take into account that NEITHER of these two peices of news negatively affects SIRI in any way shape or form? Yet the stock has dropped nearly 13% in the past three weeks.

The XM lawsuit does not affect SIRI in any way, because regardless of the outcome, SIRI already has an agreement with the music companies for the portable recording of music. Not only that, these agreements have already been priced into SIRI quarterly income figures. XM on the other hand, if they loose the lawsuit, will have to pay a settlement PLUS obtain an agreement for a price with the music companies, which Im sure will be higher than SIRI's, all of which has not been priced into anything. So why does this hurt SIRI?

XM recieves the good news that two of its contracts have been extended for factory installations. They were companies that XM already had agreements with, they were contracts that were not set to expire until 2010 anyway, and one of the companies still has SIRI installed in an aftermarket deal with SIRI which does not change. I can see where it would be disappointing for SIRI stockholders, but it should not come as that big of a surprise, especially considering Honda has nearly a 7% stake in XMSR with over 20 million shares. It should also be no surprise when GM renews it's contract, for the same reason.

So what is it that makes people hate SIRI? Is it the fact that so many people lost a lot of money on the stock? Is it the fact that analysts had their nose rubbed in the dirt by their customers because of the huge drop in stock price?

There are so many compelling reasons to own Sirius Satellite Radio.
1) SIRI's subscriber growth is much better than XMs.
2) SIRI and XM reported positive cash flow in the same quarter;
even through SIRI is behind on the "business line" being 2
years "younger".
3) SIRI managment is well known in the mergers and aquisitions dept.
4) While still heavily in debt, it is begining to take steps at cost
control. While still behind XM, it is also 2 years behind on the
business line and will catch up quickly.
5) XM is owned by institutions. Institutions hold nearly 90% of the
company. SIRI on the other hand, is only 28% owned by institutions.
The biggest reason for this is many institutions have a rule that
states they cannot own a company that has a stock price under $5.
When/If SIRI hits the $5 mark and maintains that, you will see many
more institutions buying in, which will drive the stock up further.
6) In a curious sign of loyalty, SIRI's short sellers abandoned ship
last month. December showed 141.09 million short shares, but January
saw that number drop to 118.87 million. This 22 million drop
represents 15.75% drop in shorts. Compare that to XMSR who went from
December number of 33.11 million to January number of 33.98 million,
a nearly 3% GAIN of shorts.
7) In the flurry of recent upgrades and downgrades of SIRI and XMSR,
more than one analyst has already PUBLICLY stated that SIRI will
surpass XMSR by 2009 in total subscribers, making SIRI that "best
of breed" in the industry, something that most of us knew already.
8) Speaking strictly as a customer, SIRI broadcasting is far superior
to that of XM. In the places where customers have a CHOICE of which
SatRad to go with (i.e. Retail) people choose SIRI over 60% of the
time. This customer loyalty and brand recognition will be the key
driver to SIRI's success.
9) Howard Stern, as much as I personally detest him, has done wanders
for SIRI. I think it was the best move they could have made, and I
dont think the price tag was too high for what he was able to do.
10) Hugh Panero sucks. Mel Karmazin rules. Mel is a real go-getter and
someone that makes things happen. I just dont see that from Panero.
I see Mel taking over when/if the SIRI/XMSR merger happens, with
Hugh being pacified with a board seat and an executive title and a
nice buyout.
11) Hugh Panero has a total of 155k shares in XMSR, ALL of which were
GIVEN TO HIM. The only stock purchased by him was via stock options,
which he turned around and sold the entire lot the same day (not
paperless trade). Mel on the otherhand, over the last two years has
never recieved free stock from SIRI. He has PURCHASED 2 million
shares for a combined cost of almsot 11 million dollars out of his
pocket. Mel owns a total of 6.5 million shares. Who has confidence in
their company?

Ok, enough of a rant. I've said my peice. I will also be posting this in the XMSR forum, as well as my personal blog. Feel free to come comment, good or bad. I want to see the other side of the argument.
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No. of Recommendations: 0
These two stocks have historically traded in tandem.

With slight fluctuations from time to time, when one sneezes, the other catches pneumonia and vice versa.

These two stocks do not share equal valuation, and therein lies the rub.

Check into that area in your search for justice for SIRI.

May the road rise up to meet you!

Chris
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No. of Recommendations: 0
You make excellen points!!! I agree completely. Only time will tell and SIRI will end up on top!!! It's not gonna be a short term investment as I 1st thought it might but we will make money if your in for the long haul.
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No. of Recommendations: 0
So what is it that makes people hate SIRI?

I think the answer lies somewhere in here:

5) XM is owned by institutions. Institutions hold nearly 90% of the
company. SIRI on the other hand, is only 28% owned by institutions.


--Todd
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No. of Recommendations: 0
Huh... I never considered the effect of that before. Makes perfect sense. Thanks for pointing it out.
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No. of Recommendations: 1
People and investors view thee 2 companies as 1. Satellite radio. That's all it is. There is no XM or SIRI in their minds. It's all the same company, same product.
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No. of Recommendations: 1
dstttnewman,
Sine you posted this on 02-05-07, less than 3 months ago, look at what has happened.

SIRI went from $3.68 to $2.98, a 19% drop
XMSR went from $14.21 to $11.58, a 18.5% drop

Be careful investing in companies that burn money, and don't fall in love with stocks. Bottom line is that until these guys start making money, there is no bottom in sight. This coming from someone who bought XMSR in the teens and sold most of my shares on the way back down around $25. Net sub add growth has been slowing for XM, which for a growth stock is the death knell.

Robert
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No. of Recommendations: 0
Robert, I agree completely. That is why I dont like XM right now. I like SIRI. Their numbers have continued to grow, while XMs have been dropping steadily.

I know my investment as of today (4/23/06) have lost over 21%.

And when it drops more? I will buy more. I think SIRI has a lot of growth ahead of it. I cannot say the same thing for XMSR. The proposed merger is XMs only hopes other than a buyout by someone else. SIRI can prosper without XM, and will do so in my opinion.
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No. of Recommendations: 5
SIRI can prosper without XM

Nonsense. If that were true, why would Sirius be bellowing so loudly for the merger? Why not just execute their business plan, let XM go bankrupt, then pick over the bones for pennies on the dollar? The answer is because they are likely bankrupt if the merger falls through, and they know it. Here are SIRI's "earnings" over the last few years:

2004 (678,304)
2005 (829,140)
2006 (1,067,724)

Forget subscriber growth. Minus $1.07 Billion is the only number that matters.

I like discounted cash flow as a measure of valuation. Of course, that doesn't work on profitless companies, so let's assume a successful SIRI as follows, and see what we get...

Earnings: 1/2 penny per share*
Growth (next 5 years, per annum): 23%
Growth thereafter: 10%
Discount rate: 11% (I'd go higher in reality)
No debt.

By my calculations, fair value is 96c per share, give or take a dime.

Keep in mind, that's assuming Sirius is already profitable, and debt-free. I think this is a very broken stock, and could fall a lot further before turning it around.

I've followed this stock since Stern announced. I chose not to invest then (around $7.50) for the same reasons outlined above, although the situation has grown worse today. I learned a long time ago to trust only the numbers, not the hype. Once bitten, etc.

*Sirius actually lost 79c last year, so they are a long way from a positive half-penny in earnings.
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No. of Recommendations: 1
LakeEffect,

Thank for your post. Here is another perspective.

Sole reliance on numbers is perhaps often a good measure. I am not so sure it makes sense to solely rely on numbers in the SIRI case.

I my view it is difficult to rely entirely on the numbers of this business. We can all think of many businesses that posted year after year losses before turning the corner.

With a situation like SIRI, I add to my analysis emphasis on whether or not the business makes sense to me. Satellite radio makes sense to me and it has a huge market. The service is better in many respects (limited commercials, digital signal, same station throughout the country, a great platform for music not usually available, etc.).

I see this business as a long lasting shift in radio delivery, similar to cable TV many yeas ago. I recall back then folks resisting signing-up for cable TV stating, "I am not going to pay for something I get for free". Now I would not be able to name a person I know that does not have cable TV (aside from Direct TV subscribers).

Best.

K
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No. of Recommendations: 3
I am not so sure it makes sense to solely rely on numbers in the SIRI case.

Sorry, but I gotta disagree. Investing is all about cold, hard numbers, and nothing else. The value of a share of stock is worth exactly what the underlying company is worth - nothing more, nothing less. Sure, Mr. Market is manic depressive, but the price always come home to roost in time. Know what a fair price is, and don't overpay.

When contemplating an investment, you have to ask "What is the company earning today? What can I realistically expect it to earn in the coming few years? With those earnings, what is the underlying stock worth?" Those are the questions you must be able to answer with a high degree of confidence. I posted what I think the numbers look like for Sirius, and they don't look good to me. I invite you to make your own.

We can all think of many businesses that posted year after year losses before turning the corner.

Probably not as many as you might think. And besides, the time to invest is after they turn the corner. Why buy into a losing proposition? There will always be time to get on board once they turn around. Some of my biggest losses came from believing in a story instead of seeing the plain facts under my nose. Not to mention the really good investments I missed out on while wasting my time focused on a pipe dream.

The service is better in many respects (limited commercials, digital signal, same station throughout the country, a great platform for music not usually available, etc.).

Yes, it is. I recently drove from Daytona Beach to Fort Lauterdale and back, 4 hrs each way, and listened to XM the whole trip. Satellite's a neat service, but how much money will it make? In actual dollars, calculated out and backed up with data? That's what makes the stock price go up, not some vague notion of "great potential".

Thanks for the dialog, I wish you good luck in your investments.
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I appreciate the friendly banter. After all, isn't that what is nice about these boards.

We differ to a small degree in investment philosophy but that's okay. Fair enough. We will see in time.

Kind regards.
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I appreciate the friendly banter. After all, isn't that what is nice about these boards.

Likewise. TMF is a great site. I know I've learned a ton here, and I have a ton left to learn. Good luck to you.
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