[Rev.Vassago]

Sirius And XM See Holiday Green

This has been one tough year for investors in satellite radio, but the tide is turning. For the first time this year, XM Satellite Radio's quarterly conference call, on Nov. 6, contained no disappointments, so XM shares surged due to short covering. Sirius Satellite Radio has also traded higher in November. As a company, Sirius has performed very well all year, beating and raising estimates as 2006 has progressed, but its stock has been dragged lower by XM's problems. Now, the Christmas selling season holds the key to redemption for both companies. XM (nasdaq: XMSR - news - people ) has experienced unending turmoil this year. Two directors resigned, one with great fanfare in the first quarter, saying that he thought the company was heading off a cliff if it didn't mend its ways; another resigned in the third quarter, but in a less flashy way. XM has guided subscriber goals lower three times during the year, even as Sirius (nasdaq: SIRI - news - people ) raised subscriber expectations ever so slightly. XM began the year expecting over 9 million subs by year's end. That number is now a much lower 7.7 to 7.9 million subs. Sirius started out predicting 6.1 million subs and now expects 6.3 million.

To solve its appearance of disarray, XM named Nate Davis chief operating officer on July 24. A very disciplined executive, Davis has clearly addressed XM's most pressing problems and imposed rigorous cost controls. Some analysts are starting to recommend XM's stock, or at least take it off their "sell" lists. XM remains the larger company in the satellite radio duopoly, but Sirius is rapidly catching up.

Because XM was first to market, it has been selling units for a year or two longer than Sirius. That pushes XM further down the cost curve with regard to its chipsets, especially those built into cars coming down the assembly line today. A chipset that is one or two generations more refined is much cheaper to manufacture. That shows up dramatically in SAC, or subscriber acquisition costs, the one area in which XM is far ahead of Sirius ($65 for XM and $114 for Sirius in the latest reported quarter).

XM's management recently provided a very conservative estimate of fourth-quarter revenue, lower than that of the third quarter. Unless they expect to lose a lot of existing customers, that estimate doesn't make a lot of sense to me. Perhaps it is a low-ball number the company is sure it can exceed in this biggest selling season of the year.

During the year, XM undertook several refinancings to extend the maturities of its debt and to restructure and improve its balance sheet. Also of importance, XM has operated with two co-located satellites, XM-1 and XM-2, at 115 degrees west longitude and a third one at 85 degrees west longitude. On Oct. 30, XM successfully launched its XM-4 satellite to a transfer orbit, from which it will be moved to replace XM-1 and XM-2. The first two will remain in orbit as spares. Since not all launches are successful, it is good that the satellite is up and communicating with the ground, removing another concern.

While still lagging in car factory installs, Sirius has surged at retail outlets since hiring Howard Stern, who has enhanced Sirius' brand recognition dramatically. Recently, Sirius offered a free two-day promotion of Howard to draw attention to the fact that you can receive Sirius on the Internet now. The two-day free offer was similar to what Showtime or HBO do from time to time to attract new cable customers. Sirius is also now using TV ads.

Both companies offer one free password per $12.95-a-month subscription to access radio content over the Internet, and $6.99 per additional subscriber, which includes another encrypted log-in to the Internet. Both companies are restricted their online content to only those channels they have created themselves or for which they control the copyrights. That excludes rebroadcasts of some third-party programming, such as news, weather and financial services. XM offers more than 170 channels, including Major League Baseball, and Sirius offers more than 130 channels, with all the National Football League games.

Driving new customers to Sirius are the impending addition of two important affinity groups, NASCAR in January and The Catholic Channel in the fourth quarter, each with the potential to draw huge numbers. Sirius is set to launch a major holiday push at Wal-Mart Stores (nyse: WMT - news - people ), where a lot of those NASCAR fans do their shopping; Wal-Mart will sell at least one Sirius receiver model for less than $30.

To date, XM is the clear leader in the automotive market, due to its early relationship with General Motors (nyse: GM - news - people ). XM is also factory-installed in vehicles by Porsche, Honda Motor (nyse: HMC - news - people ), Toyota Motor (nyse: TM - news - people ), Nissan Motor (nasdaq: NSANY - news - people ), Suzuki (other-otc: SZKMF.PK - news - people ), Isuzu Motors (other-otc: ISUZF - news - people ) and Hyundai. The initial XM promotion covers only three free months. After that, about 52% of car owners re-up to retain the service. That has driven churn much higher for XM than for Sirius. If someone goes into a retail establishment to purchase a satellite receiver, they are doing so because they want one, not because the car came with it.

To combat XM's higher auto churn and to learn from XM's experience, Sirius has set about promoting much longer subscription packages of one or more years from the outset with the car manufacturers who feature Sirius. Chrysler, for example, shows a one-year subscription on the sticker for its Sirius-enabled cars. Sirius is paid in advance for these subscriptions; they appear on the balance sheet as deferred revenues and are taken into revenues each month as earned that first year.

As for the holiday season, Sirius grabbed 500,000 new subscribers in only the last ten days of December 2005 and 1.2 million for all of its 2005 fourth quarter, when many stores sold out. It hopes to match those numbers this year. If it does, it will sell twice as many units as XM this quarter. Satellite radios are great, inexpensive holiday gifts and the market is still in its infancy. With over 230 million cars on the road and only 14 million estimated year-end satellite subscribers, a vast market awaits.

If Sirius is successful in adding 1.1 million new subscribers in the fourth quarter, it will have added more than 3 million new customers this year, dramatically outpacing XM's expected gain of 1.9 million new subscribers. Both companies expect to report positive cash flow for the fourth quarter, driven by sign-up promotions that must be used by Dec. 31. I would expect both companies to drop below cash flow break-even in the early quarters of 2007, although Sirius has said repeatedly all year that it expects to be cash flow break-even for all of 2007 and needs no further financing.

While we do continue to believe there is room for both companies and that both will succeed long-term, Sirius remains the stock we own and the one we prefer because it is executing on all cylinders. Some firms limit portfolio managers to only stocks over $5. Once Sirius exceeds that level, we think many fans of satellite radio will buy it. Now, our best hope is for a happy holiday season!

FORBES.COM LINK

[ben45750]

I thought this horse was dead? guess not? Can't let it die Rev can you?



SIRIUS SATELLITE R

Last Trade: 4.29
Trade Time: 4:00PM ET
Change: Up 0.32 (8.06%)

XM SATELLITE RADIO

Last Trade: 15.53
Trade Time: 4:00PM ET
Change: Up 0.91 (6.22%)

You can paint a pretty picture but the numbers never lie.

XM Satellite Radio's quarterly conference call, on Nov. 6, contained no disappointments, so XM shares surged due to short covering.

No disappointments, hmmmm that sounds like pretty good news to me?

A chipset that is one or two generations more refined is much cheaper to manufacture. That shows up dramatically in SAC, or subscriber acquisition costs, the one area in which XM is far ahead of Sirius ($65 for XM and $114 for Sirius in the latest reported quarter).

So Forbes say the SAC is higher for Sirius because the pay more for chipsets for the Sirius radios? And it's so much cheaper for XM to by chipsets? Or is it because Sirius spends money out the ass for it's on air personality's to attract subscriptions? Sounds like forbes might be a bit biased for Sirius is what it sounds like for me?

To date, XM is the clear leader in the automotive market, due to its early relationship with General Motors (nyse: GM - news - people ). XM is also factory-installed in vehicles by Porsche, Honda Motor (nyse: HMC - news - people ), Toyota Motor (nyse: TM - news - people ), Nissan Motor (nasdaq: NSANY - news - people ), Suzuki (other-otc: SZKMF.PK - news - people ), Isuzu Motors (other-otc: ISUZF - news - people ) and Hyundai.

And what are the best selling cars of 2006

1. Toyota Camry -xm
2. Honda Accord -xm
3. Toyota Corolla -xm
4. Honda Civic -xm
5. Chevy Impala -xm
6. Chevy Cobalt -xm
7. Nissan Altima -xm
8. Dodge Caravan -OOOOH 1 for Sirius
9. Chevy Trailblazer -xm
10. Honda Odyssey -xm

The initial XM promotion covers only three free months. After that, about 52% of car owners re-up to retain the service. That has driven churn much higher for XM than for Sirius.

GM and Honda as strategic partners led to additional partnerships with Toyota, Hyundai, Nissan and Porsche, which together represent nearly 60% of the auto industry.

Sirius has set about promoting much longer subscription packages of one or more years from the outset with the car manufacturers who feature Sirius. Chrysler, for example, shows a one-year subscription on the sticker for its Sirius-enabled cars

So Sirius forces people into a 1 year subscription but do they really listen to Sirius? Wonder why they don't tell you how many renew their sub? Probably cause it's a pretty low number. So if they are forced to buy the sub are they really a listener?

If Sirius is successful in adding 1.1 million new subscribers in the fourth quarter, it will have added more than 3 million new customers this year, dramatically outpacing XM's expected gain of 1.9 million new subscribers.

Sirius spending $607 million dollars (Stern and NASCAR) to get 3 million subs I hope they see a major increase in subs. XM spent what $50 million for Oprah this last year and still gain 1.9.

So who are you going to put your money on? A company that spends, spends, spends to get subscription. Or a company refining their business that hardly spends at all and has more subscriptions. A company can only buy business for so long till the money runs out.

[ben45750]

Well ken_o, might as well jump in too so we can have a sequel to the last XM/Serious thread.

[Rev.Vassago]

Originally Posted by ben45750

I thought this horse was dead? guess not? Can't let it die Rev can you?



SIRIUS SATELLITE R

Last Trade: 4.29
Trade Time: 4:00PM ET
Change: Up 0.32 (8.06%)

XM SATELLITE RADIO

Last Trade: 15.53
Trade Time: 4:00PM ET
Change: Up 0.91 (6.22%)

You can paint a pretty picture but the numbers never lie.

That's right. The numbers don't lie. Let's look at them, shall we?



Down Down Down for XM



Holding pretty steady for Sirius

No disappointments, hmmmm that sounds like pretty good news to me?

No, that is not good news. Good news would be that they beat expectations. But when XM sets their expectations so low, then it is pretty obvious they will meet them.

So Forbes say the SAC is higher for Sirius because the pay more for chipsets for the Sirius radios? And it's so much cheaper for XM to by chipsets? Or is it because Sirius spends money out the ass for it's on air personality's to attract subscriptions? Sounds like forbes might be a bit biased for Sirius is what it sounds like for me?

Nope. Forbes says EXACTLY why Sirius has a higher SAC - because XM has been in the business longer, and has absorbed the costs longer.

And what are the best selling cars of 2006

1. Toyota Camry -xm
2. Honda Accord -xm
3. Toyota Corolla -xm
4. Honda Civic -xm
5. Chevy Impala -xm
6. Chevy Cobalt -xm
7. Nissan Altima -xm
8. Dodge Caravan -OOOOH 1 for Sirius
9. Chevy Trailblazer -xm
10. Honda Odyssey -xm

And how many of those people are continuing their subscriptions beyond the FREE time period? A whopping 52%. :lol:

GM and Honda as strategic partners led to additional partnerships with Toyota, Hyundai, Nissan and Porsche, which together represent nearly 60% of the auto industry.

Whoopidy doo. That doesn't change the fact that only 52% of the people who buy those cars are actually PAYING for the service.

So Sirius forces people into a 1 year subscription but do they really listen to Sirius? Wonder why they don't tell you how many renew their sub? Probably cause it's a pretty low number. So if they are forced to buy the sub are they really a listener?

No, it is because this is a fairly new offering by Chrysler. I'm sure the numbers will come out soon enough as to how many are keeping their subscriptions after the free period, and I am willing to wager it will be higher than 52%.

Sirius spending $607 million dollars to get 3 million subs I hope they see a major increase in subs. XM spent what $50 million for Oprah this last year and still gain 1.9.

Please tell me how they spent $607 to get 3 million subscriptions. :roll:

So who are you going to put your money on? A company that spends, spends, spends to get subscription. Or a company refining their business that hardly spends at all and has more subscriptions. A company can only buy business for so long till the money runs out.

Just like a company can only give their business away for free for so long til the money runs out, as XM does.

[ken_o]

why i was waiting for u too really no point to any of this what it comes down to were stern/bubba fans and you like o/a. getting into corporate finiancial/stock info on a trucking site is past my who gives a sht meter and i used to trade siri on a regular basis but now i just sit and wait
besides dawn told me to drink a beer. so im doing as told (relaxing).
id advise you to do the same .

[Rev.Vassago]

Originally Posted by ken_o

why i was waiting for u too really no point to any of this what it comes down to were stern/bubba fans and you like o/a. getting into corporate finiancial/stock info on a trucking site is past my who gives a sht meter and i used to trade siri on a regular basis but now i just sit and wait
besides dawn told me to drink a beer. so im doing as told (relaxing).
id advise you to do the same .

To be honest, I rarely listen to Stern, and have never listened to Bubba. I had Sirius long before Stern came over, and will have Sirius long after he is gone. But this goes far beyond Stern vs. O&A - this is Sirius vs. XM. I think this is very much related to trucking, as truck drivers make up a large portion of the satellite radio subscriber base. In fact, My truck has an XM antenna up on top of my cab, installed by the factory. I have yet to activate it, and likely never will.

As far as drinking a beer, I only drink once every few years, and since I already drank once this Spring, I am gonna hold out. Besides - I don't do anything that Dawn tells me to. :wink:

[ken_o]

ok first i want you to take that xm antenna and smash it.
And i was going to have one anyway.
siri levels im watching for 3.61 4.00 and 4.5
todays runup in xmsr is the highest its been since 5/24/06
will it maintain those same levels in the hopes of a great holiday season not likely with the new addition of nascar to siri.
what goes up must come bac down hopefully over and over and overagain. thankyou market commentary for siri /xmsr by ken_O

[ben45750]

Originally Posted by ken_o

getting into corporate finiancial/stock info on a trucking site is past my who gives a sht meter

I have to agree with you there but we have to entertain Rev somehow.

[ken_o]

i would much rather c an instruction page for uploading images like you do rev my charts r nicer.
i can build a computer but havent graspd the image thing yet

[Rev.Vassago]

Originally Posted by ken_o

i would much rather c an instruction page for uploading images like you do rev my charts r nicer.
i can build a computer but havent graspd the image thing yet

Uploading images is easy, and yes - the charts are lousy, but that is all Yahoo has to offer (surprise, surprise).


http://www.photobucket.com


I'll make you both a deal - I won't post ANY more threads about Sirius or XM, as long as ben45750 will say that I was correct when Sirius finally buys out XM.