Improving Fundamentals Send Sirius XM Radio Higher

by Brandon Matthews

There is a lot of hype building over Sirius XM Radio’s (SIRI) recently leaked new hardware offering that will enable Apple (AAPL) iPhone and iPod Touch devices to be converted into satellite radios which will reportedly receive the XM Satellite Radio service. A lot of people are convinced that this docking station is somehow the reason for the extraordinary gains of Sirius XM common stock this past week.

Don’t be fooled. Although this single new piece of hardware is promising for the future of Satellite Radio, since it takes advantage of the growing popularity of 4G technology as the holiday shopping season begins to loom on the horizon, it has absolutely nothing to do with the rise in Sirius XM share prices.

Will the future offer a portable version? Time will tell. There are no doubt critics waiting in the wings to pounce on the new Sirius XM hardware offering as insignificant.

Let me save them the time.

For those that follow Satwaves, you already know that despite a lot of misinformed media articles from other sources that have made headlines around the world, we have been pounding the table with regards to the improving fundamentals that Sirius XM has been reporting as the reason to own shares of Sirius XM. Those that heeded the advice have seen their investments grow in unimaginable numbers. Those that heeded the recent bullish catapult alert earlier this week have gained nearly 25%. Stay focused.

As the cash for clunkers program winds down it is clear that auto manufacturers are on track to record quarterly sales numbers. The run rate as reported by Edmunds.com had been as high as 19.6 million vehicles in July. At that time, there had been only 1 billion dollars allocated to the CFC program. Funds were quickly exhausted. Sirius XM CEO Mel Karmazin tipped his hand at the Q2 conference call when he announced that Sirius XM had positive subscriber growth in July.

With the arrival of August, we saw an additional 2 billion dollars allocated to CFC. For the mathematically challenged, 2 billion is two times 1 billion and that 2 billion dollars is almost gone. From a satellite radio perspective, it is a complete success. Combined with an improving economic climate, there can be no doubt that subscriber acquisition rate for Sirius XM Radio will be positive again for the month of August, and in more than substantial numbers.

When one considers the company’s operating cost reductions, positive EBITDA and improved guidance, it becomes more likely that Sirius XM Radio is on track to record a quarterly per share profit for the first time. Stocks trade on earnings and, thus far, Sirius XM hasn’t had any on a per share basis. An operating profit is one thing. A net profit is another. And Sirius XM Radio speculators are seeing black.

Position: Long SIRI

Comments

[ScroogeMcduck:]

If they report + EPS next quarter this stock will sore passed $1.00
Long- SIRI

Aug 23 10:13 AM

[R A F:]

Technical Update for SIRI: The price action of the last week was technically sigfnificant, with the upside break of .60 representing the completion of a rounded bottom formation that had been building since last September. This eleven month formation held between extreme highs and lows of .60 down to .05 and the recovery from the February lows continued to progressively challenge the signficant resistance zone around .60 until the convincing upside break last Thursday. Formations such as this are technically significant, in that they project further upside potential based upon the preceding magnitude of time (duration) and price (range from highs to lows - .55 - now projected as further upside potential above .60). For all these reasons - fundamental improvements detailed by Brandon in this article, as well as technical projections of further gains to come - institutions are now seeing the merits of investment in SIRI and these flows should persist into the future. Although the percentage gains for SIRI from the lows to current levels appear substantial, in reality the actual price gains have been relatively small - only 30 to 40 cents above the narrow daily ranges that contained action through June and July before the recognition of Sirius XM'x fundamental outlook began to be recognized. These gains are miniscule in the eyes of institutions now looking to get into a major turnaround story near the ground floor. Technical forecasts project further upside potential toward .90 to 1.00+ around the November release of 3rd Qtr. earnings and guidance; toward 1.25 to 1.50 over the next six months to one year; and toward 4.00 over the next two years - representing a 50% retracement of the declines from December '05 to the lows of February. Considering this positive framework - both fundamental and technical - any near term pullbacks should remain well contained by solid underlying support and further upside testing should be anticipated as this support is seen to hold. From a timing point of view, it appears much too early - after only one day of completing an eleven month formation projecting further price gains ahead - to now be taking profits and risk getting out of positions that should be held for longer term upside potential of significant proportions.

Aug 23 10:38 AM

[Jon Smirl:]

It they'd make a music only package for $20/yr I'd activate the receiver in my car. I can't justify $120/yr for background music 45 minutes a day. The alternative is radio and hit the station change button every time a commercial comes on.

Aug 23 10:51 AM

[Ron Haynes:]

First of all, Choosing the right radio might help in the long run. Your never going to see a $20.00 a year package. One year is $142.00. But, if you buy the Plug and Play units, such as the Sportster 4 or 5, their capabilities are unlimited. You can use these units in your car, home, office, and any out door event. Like I said! "Plug and Play". They also have the Lifetime Package, which is $399.00, Never pay anything again. I have 4 radios under use, My Sportster 5 is a Lifetime package. Satellite Radio is big, and their is no end to it getting bigger and better. Sirius Xm Satellite Radio Service is great, and with the Outstanding Support to their Costumers and their quality in workmanship I see no end. I bought 1000 shares of stock in this Company. And I have never bought stock before and that is the Truth. I purchased stocks on Aug. 20,2009. It's always a gamble, but so is life. Sirius Xm, and Satellite Radio are the Future with nothing to Hold it Back. With today technology, This is big and can only get Better. Thank You to Sirius, Xm, and to all the Loyal subscribers out their. Once you try this service, you will not be Sorry. It is the Future, with capabilities UNLIMTED!!!!!!!!!!!!!!!!

Aug 23 12:46 PM

[Sirilover:]

>It they'd make a music only package for $20/yr I'd activate the receiver in my car. I can't justify $120/yr for background music 45 minutes a day. The alternative is radio and hit the station change button every time a commercial comes <

I'm curious do you subscribe to cable TV?

Aug 23 12:54 PM

[Ron Haynes:]

Yes, I do.

Thanks

Aug 23 01:15 PM

[Ron Haynes:]

I thought my information might be helpful to you. I think Satellite Radio is the Future and is Outstanding. Have a Good day.

Aug 23 01:19 PM

[Novice Trader:]

Dear Sir,

Like you, I let the bundled subscription expire 6 months after I bought my truck. I can't justify spending even $10/mo when I'm in my truck but maybe 40 minutes/day, every other day – especially because when I am, I’m listening to my favorite A.M. talk shows, with Rush being one of them.

However, after reading the replies to your post, specifically Mr Haynes, who pointed out that you can buy a lifetime subscription as well as plug and play accessories to make it work with your other audio equipment, I'm not only going to have another look into their service plan options, I’m going to have a look at their plug and play accessories!

I've only been a fan as of recent, when I bought 10,000 @ $0.50 and 11,150 @ $0.568… I think the stock will, at least, hit $1 within weeks.

I think this stock could do much better if management would allocate (or better allocate) more funds to advertise their product, i.e. monthly subscription charges, the lifetime subscription charges and accessories which enable it to work (plug & play @ that!!), along with the channels you get with their service...


On Aug 23 10:51 AM Jon Smirl wrote:

> It they'd make a music only package for $20/yr I'd activate the receiver
> in my car. I can't justify $120/yr for background music 45 minutes
> a day. The alternative is radio and hit the station change button
> every time a commercial comes on.

Aug 23 01:44 PM

[Ron Haynes:]

Thank You, Novice Trader. I just wish people would take the time to check more into Sirius Xm Radio. I think you will find that Plug and Play are the way to go. And you are right! Sirius Xm should take the time to advertise their product a lot more. One other note you might be interest in. You can have more than one radio on your account. Whether you are a Lifetime, or a Yearly Subscriber, you can add 2,3,4,5, radio to that account and only pay 83.00 per year for each additional radio. Because you already have an account with them. But your first Radio is your primary one, so that radio has to remain activated to get the discounts on the 2,3,4,5 radio. I bet a lot of people don't know that. Like I said, please give Sirius Xm a call. I think you will be Surprised!!!!!!! Thank You.


On Aug 23 01:44 PM Novice Trader wrote:

> Dear Sir,
>
> Like you, I let the bundled subscription expire 6 months after I
> bought my truck. I can't justify spending even $10/mo when I'm in
> my truck but maybe 40 minutes/day, every other day – especially because
> when I am, I’m listening to my favorite A.M. talk shows, with Rush
> being one of them.
>
> However, after reading the replies to your post, specifically Mr
> Haynes, who pointed out that you can buy a lifetime subscription
> as well as plug and play accessories to make it work with your other
> audio equipment, I'm not only going to have another look into their
> service plan options, I’m going to have a look at their plug and
> play accessories!
>
> I've only been a fan as of recent, when I bought 10,000 @ $0.50 and
> 11,150 @ $0.568… I think the stock will, at least, hit $1 within
> weeks.
>
> I think this stock could do much better if management would allocate
> (or better allocate) more funds to advertise their product, i.e.
> monthly subscription charges, the lifetime subscription charges and
> accessories which enable it to work (plug &amp; play @ that!!), along
> with the channels you get with their service...

Aug 23 02:46 PM

[Ron Haynes:]

* Ron Haynes:
* Comments (4)

* Follow

Thank You, Novice Trader. I just wish people would take the time to check more into Sirius Xm Radio. I think you will find that Plug and Play are the way to go. And you are right! Sirius Xm should take the time to advertise their product a lot more. One other note you might be interest in. You can have more than one radio on your account. Whether you are a Lifetime, or a Yearly Subscriber, you can add 2,3,4,5, radio to that account and only pay 83.00 per year for each additional radio. Because you already have an account with them. But your first Radio is your primary one, so that radio has to remain activated to get the discounts on the 2,3,4,5 radio. I bet a lot of people don't know that. Like I said, please give Sirius Xm a call. I think you will be Surprised!!!!!!! Thank You.

Aug 23 02:48 PM

[Jerrold Wil...:]

I have long had the plug and play option and felt that they were the best option. My cars have always been older so I really didnt have a choice. However, with the pre-installed units, you are so limited and makes the $12.95 price too much for just radio in the car. The best value has been the portable radios such as the xmp3. I get to use in my car, at the gym, in the house, on the bus, etc....They also need to advertise the a la carte option more as well. It is only $6.99 per month for 50 chanels. I feel the company has not promoted this due to wanting to increase ARPU. They did this to get the merger approved, but they should make more radios able to do the a la carte option. I feel the bottom has been reached and subscription growth will once again be positive. The partnership with apple will be great for brand recognition and making it more "cool". I hope they have more things that will be announced besides what has been leaked.

Aug 23 07:00 PM

[siriusaldo:]

the negative media is ready to give up, it will be to embarrassing to continuing bashing Sirius xm

0.85 by tusday,
GO FETCH BLUE DOG

Aug 24 06:05 AM

[Traveler 1:]

Stay Long, add to position under $1.00 and buy any pull back 0.5 or more.

Aug 24 01:25 PM

[Traveler 1:]

Keep driving your truck and listening to Rush. Enjoy the low MPG
and the other looser.


On Aug 23 01:44 PM Novice Trader wrote:

> Dear Sir,
>
> Like you, I let the bundled subscription expire 6 months after I
> bought my truck. I can't justify spending even $10/mo when I'm in
> my truck but maybe 40 minutes/day, every other day – especially because
> when I am, I’m listening to my favorite A.M. talk shows, with Rush
> being one of them.
>
> However, after reading the replies to your post, specifically Mr
> Haynes, who pointed out that you can buy a lifetime subscription
> as well as plug and play accessories to make it work with your other
> audio equipment, I'm not only going to have another look into their
> service plan options, I’m going to have a look at their plug and
> play accessories!
>
> I've only been a fan as of recent, when I bought 10,000 @ $0.50 and
> 11,150 @ $0.568… I think the stock will, at least, hit $1 within
> weeks.
>
> I think this stock could do much better if management would allocate
> (or better allocate) more funds to advertise their product, i.e.
> monthly subscription charges, the lifetime subscription charges and
> accessories which enable it to work (plug &amp; play @ that!!), along
> with the channels you get with their service...

Aug 24 01:30 PM