Sirius XM: A More than Viable Stock

| About: Sirius XM (SIRI)

By Steve Garcia

As we have watched Sirius XM (NASDAQ:SIRI) begin to shed its bashed and tarnished negative image and start to show real promise again in the metrics of the company, there are still media people out there willing to try and take a stab at some condescending commentary. It is truly amazing how perceptions are so polarizing and opposite with this company. The truth usually lies somewhere in the middle, and as a shareholder I see a glass half full but there are many who see a glass half empty. What I find most annoying is the stories that come out with a negative slant are only a half hearted attempt at providing real information. Below I have several excerpts from articles which appeared this week and included Sirius XM with what I perceive to be negative connotations. Negatives that are not justifiable, just attempts to scare off the average person thinking about dabbling in Sirius stock at this point. Below are the excerpts I choose to highlight this week.

The following is from a Mike Santoli article in Barron’s entitled ”Don’t Sweat the Junky Stuff.”

For sure, the market won’t keep going up an average of 0.4% a day, as it has since July 13. And aside from the above-mentioned financial stocks, there has been some recent frothy speculation in lottery-ticket stocks such as Vonage (NYSE:VG) and Sirius Satellite (SIRI), which should serve as a caution flag.

Apparently, Mr. Santoli knows nothing about Sirius XM, and follows the Mad Money windbag of opinion known as Jim Cramer, whose comments have ranged from Sirius should not even be a stock, to Sirius stock should be given to the bond holders. That last part is kind of funny. Why would you say worthless common stock should be given to the holders of the company’s debt…..but I digress. This article uses the exact same language in fact that Jim Cramer used this past week….word for word! It’s nothing less than plagiarism of a joke television show offered as expert financial advice. Barron’s editors should take note. A pink slip is in order.

This next little tidbit is from a Rick Munnariz article at Motley Fool entitled “Apple Fails Sirius XM Again.”

I’m a satisfied iPhone owner. I subscribe to both Sirius and XM. Convergence — at a premium — is no slam dunk. Apple is a developer magnet, with thousands of apps shouting “pick me!” in the App Store. It’s hard to get noticed in a crowd, especially when you’re competing in a realm of fierce, no-cost rivals.” iPhone owners are paying AT&T $20 to $30 a month for unlimited data plans that give them access to free apps including Pandora, imeem, and Time Warner’s (NYSE:TWX) AOL Music. Wireless isn’t the future for satellite radio. XM has offered limited programming at discounted prices for years through its XM Radio Mobile platform. It’s available through Alltel (NYSE:AT), AT&T (NYSE:T), and select models of Research In Motion’s (RIMM) BlackBerry.

What no cost rivals are you speaking of Mr. Munnariz? Pandora is charging $36 dollars a year right now for their ”FREE” service to not have annoying advertising pop ups coming at subscribers. Slacker charges $3.99 a month for unlimited skipping of songs you don’t want to hear and no banner or pop up advertising. Neither sounds free to me, and neither has the content quality and variety you get with Sirius XM. IMEEM and AOL music are a stretch to even include as competition. As for wireless not being the future of Sirius XM, I’ll give you a half correct on that one..but Sirius XM is getting down to business with the internet version of their service. It has a price, but it also has much better content and variety than imeem and AOL music. There are also some terrific radios out there from Tivoli and Grace to take advantage of the premium Sirius internet stream, and a new table top wireless radio was just introduced by Sirius XM on Wednesday last week.

Last but not least, my favorite comment for this past week from “Beware of Penny Stock Profits” by Anders Bylund at Motley Fool.

Moreover, many of these and other penny-stock winners are still extremely speculative. Sirius may still collapse under a capital-intensive business model.

I will simply counter with this, as Mr. Bylund apparently didn’t do his homework before writing Sirius XM into his article. The 2nd Quarter saw a surprise in reduction of sub losses, at a time where the economy was still horrible for the most part, and GM and Chrysler were going through Bankruptcy proceedings. Sirius XM also has managed to pay off its loans from Liberty with new offerings at significantly lower interest than Liberty was, and Sirius XM paid no penalties or fees for terminating the Liberty loans early.

In addition, Cash for Clunkers has done nothing but help Sirius XM’s subscriber numbers leading into the 3rd Quarter. Synergies of the combined company are providing real cost savings, and by his own admission Mel Karmazin was cautiously optimistic based on a very good month of July numbers wise. Now add in the Sirius App for Apple (NASDAQ:AAPL) iPhone and the iPod touch, the just revealed skydock, and the ability to pass royalty payments to subscribers, which though slightly negative, is only fair. Think about any cell phone bill and all the government fees. Shouldn’t music artists get paid for giving us enjoyment?

When you put these factors together, along with the fact that Sirius XM has moved most of its debt out to at least 2013, saying Sirius may still collapse and is extremely speculative sure seems like a stretch. As Sirius XM continues to implement its strategies and cost cutting measures it is my contention that Sirius XM will survive and thrive, but what do I know, I look at the facts.

Position: Long SIRI