Jesus christ, what a dog. I think we all knew it was a dog, but trading at 92 cents? Come on, this was at 2.40ish right before the merger ~ 1 month ago. Insane.

Is that where it's at now?

Wow. Glad I cut my losses on that one.

They just issued a presentation that detailed the expected cost savings of the merger and it actually looked better than I thought. The problem of course is that you have a couple years of uncertainty before they really start to hit on all cylinders and it's unclear if more dilution will happen, so it's the kind of long term buy and hold that isn't a big part of my current portfolio.

If it gets to 75 cents I think it starts to get really interesting.

Sirius has been fighting obsolescence from the day they formed. Zero value imo.

They will be hugely profitable within four years. You underestimate how long the existing hardware will be viable, and how their customer base, brand, and content will enable them to dominate when the world goes to an open platform.

Four years? Nobody on the street cares about four years down the road bro.

They will if today's shareholders are holding a ten bagger in four years. They'll say, oh why oh why didn't I see it was so obvious.

And your second response is very curious given your first response..

Sirius is clearly not obsolescent now, and won't be for years if ever, so why should anyone "on the street" care about something that far in the future? You guys "on the street" are fascinatingly contradictory.

And what street is it you work on, and how do you get internet access. Public WiFi?

I bought a little in the low 1 dollar range and may buy a little more if it goes lower. Very speculative stock obviously. Fundamentals aren't great but the savings down the line seems to be being ignored.

And let me make my position clear, I haven't bought any and probably will never. But if it gets to 75 cents I'd have to look at it hard. I just hate tying up money for so long in such a speculative situation. It's always possible they don't achieve the cost savings, subscriber growth isn't what they forecast, etc.

There are only two reasons to own SIRI.

1: They will find a way to refinance all their debt in 2009. - Less and less likely each passing day.

2: They will get bought out by some firm. Even less likely because of #1 and the general M&A scene.

Vonage (VG) is in a similar boat where they basically offer a service that simply has better substitutes (at least in the US market) They were able to refi their debt, but the credit markets were more favorable at the time.

You're more likely to see Bush get elected for a 4th term in 4 years than you are with this stock being a "ten bagger" in the same time frame. Do you really think this stock will be worth 30 billion dollars in that time frame? (Maybe you think inflation is going to go crazy.)

Anyways, I think SIRI is affected by the fact that some people think the stock is cheap solely because it's listed at a buck... but some people forget that a dollar stock can be expensive when a fifty dollar stock can be cheap.

While I don't necessarily believe in the stock, I think you're severely underestimating the quality and demand of their product.

Guess you still think that 8MB of RAM is the most any computer will ever need?

All we need is a national WiFi network at broadband speeds and boom we have an open market free radio that you don't need to stick an ugly antenna out the window for.

The internet may be free, but radio won't. Do you really believe that licensing agencies are going to let music be played indiscriminantly by internet radio stations? I once ran a company that had all of the leading internet radio stations as clients, and almost all of them are gone now as is my former company.

Sirius has tons of valuable proprietary content (Howard Stern, etc) and a relationship with music licensing groups that already allows them to stream over the internet. They'll have by far the largest customer base in internet streaming when it becomes important.

I can trump your whole argument with one URL.

http://shoutcast.com/

I can't find live MLB, NFL, NHL or NBA there.

Oh, also, that nationwide wifi thing isn't going to happen tomorrow.

Cable television probably seemed silly at one point. There is a market for satellite radio. Nearly 20 million people have proved it, and more continue to do so everyday.

Not stating it has been a good investment as it clearly has not been. Going forward who knows, but for now, **** this dog.

Comparing a commodity business like Vonage to a consumer monopoly like Sirius is about as wrong a comparison can get.

It's not inflation. SIRI did $1.9B in revenues last year, they are predicting $2.7B next year. $4B in revenues in four years is a very reasonable prediction. And given the huge cost savings the merger created, their GAAP earnings should be at least $500M and their cash earnings will be double that.

Now do I think the market will put a $30B valuation on SIRI? No, if I did I would buy it now, I used 10 bagger as an example of the potential, it's the upper bounds of what's possible in four years. But it's hard to think a business with $500M in competition insulated GAAP earnings growing 15% a year is going to be priced much less than $15B by the market at that time.

And if it hits those numbers, a 10 bagger is almost pre-ordained in years 5-6, and a 20 bagger before year 10. It's not so large a business that it's growth will slow substantially anytime in the next decade.

I just don't think you've really read their financials or thought about their business much. First, this is a consumer monopoly. If you want high quality music, hundreds of channels, every major sport, or popular entertainers like Stern in an uncensored environment in your car, there won't be any other choice for a long while.

Stern, the NFL, NBA, MLB, etc, won't have another satellite service negotiating for their services any more that they can use to driving up their asking prices. And they can't go anywhere else, because of censorship or lack of channels to carry an entire game schedule. Not only does this lower Sirius costs over time as these deals are renegotiated, but it increases product demand because now subscribers don't have to worry about which service to get, they get everything on either Sirius-XM platform. The product just became more valuable because of the merger, and they are also charging more for the combined service.

And now they no longer have to give stock and subsidies to auto-makers to win deals. You can't sell a car anymore without have a satelllite option, and Sirius can now charge for their costs in making that happen. Their costs dropped and distribution widened.

And then half of their marketing department just disappeared. A big chunk of R&D, and engineering (transponder maintenance) disappeared. G&A has been slashed.

If WiFi becomes predominant in cars, they can put their satellites on maintenance mode and transition customers to the internet and their capital costs drop dramatically.

While the scenarios I painted here are the upside, there are of course risks. First is being heavily diluted by the aforementioned debt refinancing. Second is growth being slower, or the cost savings being less. I actually think their growth rate may increase over the next year or two because they will no longer be selling against each other, the merged products are more valuable and customer confusion will decline dramatically.

Nothing is set in stone. Like I said, if I was certain a 10 bagger was achievable in four years, I'd already be an shareholder. I just don't like tying up capital that long when I have very high return shorter term opportunities. But I wouldn't be surprised if Bill Miller is already a large shareholder. This is just the type of investment idea that made his fund so successful (before it became too big).

Okay, one of my former customers is still alive. But probably the only one.

Yea, I can't seem to access this from my car. And when I can the RIAA will sue these guys into oblivion every time they try to play a song from an RIAA artist. They are going to protect royalty paying radio clientele, which includes SIRI, to the death before they allow their artists to lose a penny of royalty revenue to free internet sources.

Did you notice how many listeners these stations have? Not enough to make them a good sized college station. As soon as they get big enough to have significant audience sizes and revenues, they are sitting ducks.

Believe you me, the RIAA killed my customers and my companies business. They are unreasonable jerks who hate internet radio, and that's not likely to change. Read this article to get up to date.

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

SIRI will win because it's not trying to play music for free. No advertising supported model can pay both the costs of streaming and RIAA's royalty demands. SIRI has subscription revenue that dwarfs advertising revenues, and also has negotiated substantially lower royalty rates than internet broadcasters can. And SIRI only pays royalties on a subset of it's channels.

For anyone who doesn't know. This is taken from an issue of the San Diego Union-Tribune.

I have XM and I like some music and some talk, so it looks like I am stuck paying $16.99. Kind of sucks that I don't get any other choice. I'm not sure what I'm paying now as I pay for a full year and it's taken directly out of my account. My initial reaction to these plans was that they were poorly designed, but maybe there was no other alternative.

bumping this to ask anyone's thoughts on the impact of Howard's contract negotiations on the stock price....A couple scenarios come to mind for me, and I can't see either of them being good for the stock price. Anyone have a reason that I shouldn't bail on this before the decision and take my profit?

1) He signs but it's for too much money, stock price drops
2) He leaves, subscribers who went there only for Stern bail, stock price drops


I can't see him staying there for much less money, and I can't see Siri dishing out the $100mm/year for him again. The way he's talking, it seems he's leaning towards an internet based show, and even less days than they are already doing.

it'll be fascinating to see just how much of SIRI's value is locked up in Howard Stern. His contract's up in about 50 more shows and he has recently said that he is continuing the show whether it's at Sirius or on some other medium. so the stock is definitely in a holding pattern until he makes his decision.

the stock's probably pricing in his leaving, and also the initial reaction to any stern news will likely be selling. but if he stays, i think the company is in for some upside as that uncertainty will be out of the market.

Stern said almost for sure this week he wouldn't be back, it was in the financial news and no impact on the stock. They would have to lose ~1M subscribers to break even. I don't think they lose that many, too many pre-installed units in cars now and people prefer commercial free music. Stern was instrumental in building this company but they can live without him now, I own SIRI and although the initial subscriber drop may hurt the stock I am holding.

in my opinion, anything stern speculates about on the show saying things like "i probably won't be back" really mean nothing until he says it for sure.

myself included, a huge block of subscribers would no longer see a need to pay sirius whatever it is if stern is not part of the package.

I bought some when it was at 30cents, I'm leaning towards dumping half of it now.

IMO Stern has no intentions of starting all over again, he is comfortable now. On absolute cruise control, he already has a ton of vacation time. Him and Mel have a good relationship. His new deal will be another sweetheart contract probably with him doing half the work the now and perhaps get half the money.

Sirius won't let him go and I don't think Stern wants to go anywhere. He is about to retire, just coasting now is fine for him.

I think the stock price won't move too much, if anything knowing that Stern re-signs will give SIRI a boost imo.

IIRC, Stern accounted for at least 3M of Sirius's subscriber growth when it was competing with XM. Every 1M subscribers who listen to Stern are worth at least $150M per year, they are paying a premium for his channels.

I listened to Howard this week and my take was he's semi-serious, but it's also likely a negotiating posture. And it's not just money, if it's SIRI preventing him from starting the show an hour or two later so he can have a more fulfilling week-life, leaving would give him a much better lifestyle. I'd hope they'd be very flexible about work times and days in order to keep him, cause if he leaves they are going to lose a hella amount of revenue.

And I don't think he needs $100M a year to stay, the original deal was $50m a year in cash (which also covered staff salaries and show expenses), and an amount of stock originally valued at $50M per year, but now almost worthless. But he's easily worth $50M a year to SIRI, they should probably offer up to at least $75M a year to keep him. But if he goes to the internet, it shouldn't take long for him to make $50M. He only needs 1M subscribers paying $4 per month, and he probably has as many as 10M regular/irregular listeners.

If he leaves, I'm pretty sure they'll lose at least $100M in revenue, and possibly two or three times that. I say this because I'll either turn it off entirely in both my families cars, or lower it to the cheapest level possible. Right now, other than Stern, I'm just listening to music, no sports, and I can get tons of music from local radio. If many stern listeners switch from $15 per month to $6, that's over $100 per year lost per Stern subscriber who didn't quit, and $180 for those who did.

But more importantly, my experience with Sirius and XM customer service this year was so awful I just hate paying them anything. I bought two new cars with XM and they made it incredibly difficult to cancel my old Sirius plans, and then ended up canceling my cars service for a week. I dread ever picking up the phone to sit on wait for 20 minutes to talk to them, only to have them screw it up again. I don't even want to go to the web site because every time I forget my password it's like a dental appointment to get back in.

This should be an easy business, but two years later they still haven't merged their web sites, the customer service departments, or the customer databases. If I had a more positive experience with them, and was using their internet streaming (why should I when it won't give me the Stern show I pay extra for every month), I'd be more locked in and would pay for it forever just so I had more options when I'm driving out of area, etc. But right now they are screwing up this business royally and they need Stern to keep my business.