Seeking Alpha
Profile| Send Message|
( followers)  

Over the past few days, a few of my fellow contributors have written articles about their bearish outlook on Sirius Radio (NASDAQ:SIRI). They make some good points, though I do tend to disagree with some of the points they have made. That doesn't mean I do not respect their opinion or how they choose to use data available. In the investment world, quite a bit of your strategy is based on how you interpret the information you are given. People can interpret it in different ways -- they have their ways, you and I have ours, and so on and so on.

As many of you know, I am very bullish on SIRI stock, though I have taken a step back in the last month or so. On a scale of 1-10 I was probably a 9 a month ago, today I am at a 7.5. It does not mean anything other than the information available is causing me to not be as bullish as I was before; I just reevaluated Sirius and moved forward.

This stock does have the potential to hit $3.00 in the next 6-9 months. The estimates on subs and FCF I am assuming are undersold (as usual) and I assume they will pay down some debt (hopefully more than they have spoke about) no later than this September, but I think to get to the magic $3 in the near future they need more. In my opinion I believe some things need to happen in order to make this come to fruition.

I have listed some things that could help the stock get to that point. I am not saying all need to happen, but some would have to, in order to reach the $3 many of us believe this stock is capable of reaching:

Sirius gets bought out: I wrote an article about possibilities for this earlier this week and asked for input on possibilities as well as the ones I listed. Apple (NASDAQ:AAPL), Liberty (NASDAQ:LMCA), even Research in Motion (RIMM) were listed as possibilities among many others by the readers. Anyone having to fight harder to gain control (which is any company but Liberty) would certainly drive the price to $3. If Liberty does make a play for Sirius, unless they go for more of a stake than 51%, I do not believe that $3 will be a price it will reach nor maintain and even if they do go for the full Monty, it still may not reach it.

Sirius partners up: Again, this is another way for Sirius to beef up its bottom line. I believe this is a way they can do it. Whether it is with a cable outfit like Verizon (NYSE:VZ) to get their channels on FiOS, or with Apple (for an even more advanced and expensive dashboard) or perhaps with someone we haven't thought of like Google (NASDAQ:GOOG) or Microsoft (NASDAQ:MSFT), they need something new. Sirius' content is above anything else out there, but perhaps they need a different way to market it, which I believe is an area in which Sirius is a bit lacking.

Go international: A reader of one of my articles mentioned this, though I have thought about it a long time as well. Sirius has a platform where everything is transmitted from satellites. There are no restrictions like territorial radio has with antennas and so on. They are bouncing their content off satellites, why not get it into everywhere? I know they have begun a movement into the Latin market, but why stop there? Why not have channels in German, French, Russian etc? What about getting Howard Stern shows rebroadcast in Ukraine for all to hear (rebroadcast in their native tongue of course)? I want to see the cars in Germany rolling off the lots with Sirius platforms in the dash along with a free 3 month trial. Of course they would need to hire more international "stars" for the content, but I am sure getting "German Hits of the '70s" as a station would not be all that hard!

These are a few ideas on how Sirius can start to make the jump; you are welcome to add to the list as well. As of now, I do not anticipate any major changes in the price in the next 30 days (or at least until March when there may be a buy-up before March 6th). You may see a 5-10% upswing there. I for one am going to hold, keep using the covered call strategy I spoke about earlier this week for some extra cash, and go from there.

Source: How Sirius Can Reach $3

Additional disclosure: I may purchase shares or options in LMCA in the next 48 hours.