Sirius XM Poised to Profit from Muzak Bankruptcy 83 comments
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By Brandon Matthews
When it comes to Sirius XM Radio (SIRI), many of the company’s followers fall victim to tunnel-vision. My friend Rick M. of the Motley Fool for example used a comparison to DirecTV (DTV) in attempting to put a fair value on shares of the Satellite Radio provider. Although I agree with current valuation being fair at approximately $1.25 to $1.50, which is higher by far than the current price per share of .67, the longer term prospects are debatable.
While a comparison of Sirius XM to DirecTV may seem reasonable on the surface, it falls short on several levels. DirecTV must compete with Dish Network (DISH), as well as a host of established cable operators throughout the country. The success of any business can be measured by its market penetration. As a Satellite Radio monopoly, Sirius XM Radio’s potential market far exceeds that of DirecTV. Try as I might, I cannot find a single instance as an example, where DirecTV, Dish or any cable operator has installation contracts with auto manufacturers. I have yet to see a single portable satellite television being dragged onto a beach, and no company that I am aware of will allow employees to watch television at work.
The only true competitive threat to Satellite Radio comes from terrestrial radio companies, and that business model is proving to be a thing of the past. As terrestrial radio stations nationwide run into each other in attempts to hold on to a dwindling localized market share, the trend is clear that more and more of these stations will alienate their listeners further by shutting down and/or switching formats in a best case scenario.
At one time, former Sirius Satellite Radio C.E.O. Joseph Clayton estimated the potential Satellite Radio market at over 300 million subscribers. According to Arbitron’s (ARB) most coveted report on radio that was just released this week, over 235 million people per week listen to radio, up over 4 million from Arbitron’s last report in 2007. Neither of these reports measures Satellite Radio listenership.
And then there is Muzak, the supplier of music to businesses that is currently in Chapter 11. Comparing the services of Sirius XM for business to those of Muzak, Sirius XM is poised to continue to take market share from the once single supplier of music to this huge niche market.
Muzak has faced a host of problems in that it charges excessive fees and royalties to its customers, charges for equipment, and requires clients to sign long term contracts.
None of this has been lost on Sirius XM Radio which now employs no less than three separate companies to promote its Sirius XM music for business division. As Muzak's long term contracts expire, it is clear that most are choosing to not renew, and Sirius XM Radio is poised to capitalize on this market going forward with commercial free music, no royalty hassles, low cost equipment and no long term contracts. A questionable economic recovery will aid this overlooked aspect of the Satellite Radio business model.
When the reality of Muzak’s bankruptcy and the pending probable bankruptcy of Clear Channel (CCO) in the coming months sets in to the brilliant minds of Wall Street, and as Sirius XM continues to gain market share, increase revenue and effectively manage its debt, the ceiling for Satellite Radio shares is truly unknown.
Position: Long SIRI
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1
Mr. Stupid suggestion:
Sell now and buy back on Friday at .53-.54.
I hate to be right but i'm have that knack.
Mr. STupid
On Sep 28 12:51 AM jmsithy wrote:
> like I said you are the 34% to believe in this
> you think .52 is a bit? since this dropped from .70???? we know where
> you lie in this stock profit or no profit I dont think you ever wanted
> this to go up
>
> On Sep 27 10:55 PM Mr. Stupid wrote:
Tulopia Tim, Or Albacore Al or Salmon Sirius?
sheet change day.
On Sep 28 11:25 AM between the hedges wrote:
> If you want to get the goods on this stock, look at Tuna Amobi's
> report and price target.
No worry for at least 9 months, if ever.
TALK TURKY
SIRI has the short term covered in user base and revolving credit. I do see a future for SIRI in the long term. The determining factor is mostly the condition of the economy. I do not see SIRI being able to withstand a continued economic down turn. However, if you’re an optimist and have faith in Obama-Spend-Onomics, than SIRI may live.
Unfortunately, SIRI stock is a dead play until all rev-split and delisting issues are off the table. I am not saying you can’t make money. I am saying the risk is ridiculous.
Get ready for a fully manipulated wild ride on the Goldman Sachs flash trading computer.
*** I never SHORT SIRI. It is too easy to make day trade money on SIRI playing the 3 cent spread against the Goldman Sachs computer. But that is out until the rev-splt is off the table done...
It is unwise to buy/hold SIRI with pending rev-split and two violations of NASDAQ listing rules. SIRI is already under 130 days remaining to correct the 1.00 trading rule. It is unreasonable to assume SIRI would ask for more time given they already have a plan and stock holder permission to rev-split. But, Mel will make it look good, like the world is attacking him.
NOT AT ANY PRICE - Buying SIRI low at this time with rev-split pending is just plain nuts. SIRI is a massive loser even at 10 cents. At 10 cents the rev-split to 5.00 would be 50 for 1. A recipe for big devaluation.
The bad news press release is always issued after hours. Mel loves locking up stock holders after hours. He has always released bad news after hours, every single time. So, you can not even day trade SIRI for fear of rev-split news… RISK…
Just take a look at it. I invested in it at .0029.
Also, another one to look at would be ETFC. They may get an offer from Schwab or one of the other online brokers plus GS just upgraded them from hold to buy.
Mr. Stupid
On Sep 28 06:45 PM Mr. Stupid wrote:
> Jsmithy, sell your Siri and invest in CBAI if you want to make your
> money back like real quick. CBAI is finishing up their brand new
> state of the art facility here in Los Vegas for their stem cell storage.
>
>
> Just take a look at it. I invested in it at .0029.
>
> Also, another one to look at would be ETFC. They may get an offer
> from Schwab or one of the other online brokers plus GS just upgraded
> them from hold to buy.
>
> Mr. Stupid
On Sep 28 06:45 PM Mr. Stupid wrote:
> Jsmithy, sell your Siri and invest in CBAI if you want to make your
> money back like real quick. CBAI is finishing up their brand new
> state of the art facility here in Los Vegas for their stem cell storage.
>
>
> Just take a look at it. I invested in it at .0029.
>
> Also, another one to look at would be ETFC. They may get an offer
> from Schwab or one of the other online brokers plus GS just upgraded
> them from hold to buy.
>
> Mr. Stupid
On Sep 28 08:01 PM jmsithy wrote:
> Thx for the tip on CBIA it will be great to invest on the ground
> floor of this stock and right on time as well
ETFC? Oh my... Not a good choice to sit on. ETFC is also a beat up stock with looming problems. Day trade only. Sometimes it swing 20 cents every three or four days. Sometimes it sits for weeks... Pick a nother...
On Sep 28 06:19 PM jmsithy wrote:
> I will be cutting my losses after tomorrow after reinvesting at .62
> unless it is up highly unlikely need to get into a better investment
> this was a good ride for 6 months with the ups and downs, but this
> has too much riding against this stock regaurdless / Im tired of
> trying to read this stock on where it is going I just want to put
> my money in and not worry if this goes up by 3 cents to have this
> drop by 5 or 6 because of the mass short selling
Hee Haw!
Hee Haw!
It is a fact. Get use to it.
Mel has openly informed stock holders of this plan intent to rev-split during the last two stock holder meetings.
We all know what happens to stock that rev-splits especially with vary bad books. SIRI is in for some wild sp swings. RISK!