What Will the Future Hold for SIRI-XM?

You have to wonder what Mel Karazmin has up his sleeve next now that he has managed to pull off the merger of the decade. Now of course comes the enormous task of convincing Wall Street that satellite radio is a profitable enough business to keep the naked shorting wolves at bay. Although it is encouraging that short interest in SIRIXM (SIRI) (I PRONOUNCE THEE SERICKSUM) has been cut in half recently, it doesn't exactly fill me with warm fuzzy thoughts either. After all, shorting is what has pounded this stock into dust in the last 30 days.

Regardless of Mel's recent appearance on Mad Money to calm stock holders, there is still the underlying question of what the future holds for satellite radio. It is no secret that I think the Internet is going to be a large competitive factor; especially when I read that Chrysler is fitting vehicles with wireless routers with a $29.00 per month subscription rate.

So what becomes more important to the consumer? $12.00 per month to hear satellite content or $29.00 per month to keep the kids quiet in the back seat so they can check their MySpace page and listen to Internet radio on Pandora or AOL? And It isn't to difficult to stream that Internet connection to the car stereo either.

Then again, you have the iPod, which will also be able to connect to the same wireless router and offer the same service as the PC. Or maybe Mom and Dad opt for both Satellite and Internet because after all, content is king, and SIRIXM has a ton of it. And on and on and on..... It is definitely going to be an interesting year for satellite radio.

Now let me repeat my previous statement.

You have to wonder what Mel Karazmin has up his sleeve next now that he has managed to pull off the merger of the decade.

What if... Apple (AAPL) were to acquire SIRIXM? Now you can have a receiver with a built in hard drive capability to have all the same functions as your iPod as well as streaming all the great content from Satellite radio. More to the point, you could also streamline Siri to your iPod or iPhone without having to buy a separate application. Although this is a very interesting concept, it is probably just a pipe dream. After all Apple is not in the radio business. And what would be the real benefit to its bottom line at this point?

What if... Microsoft (MSFT) were to buy SIRIXM? Microsoft desperately needs a shot of adrenaline to compete with the shellacking it is receiving from the Apple. Microsoft's bread and butter is the Windows Operating System, which has gone stale and more lackluster with every version. Its Office Products are unnecessary when you have a wonderful free product like Sun Micro's Open Office that not only clones Microsoft Office but will allow you to save files in Microsoft format. But I digress. My point is that yes, SIRIXM is a technology stock but it is at its core, still a radio media company.

Microsoft is not in the radio business. I just don't see a workable marriage there.

The only real merger or acquisition that makes real sense to me would be if Clear Channel (CCU) or NBC (GE) were to buy SIRIXM. Because if anyone needs a shot in the arm it is terrestrial radio.

In any case, regardless of ownership I believe 100% that Satellite radio is not going anywhere as long as it continues to bind agreements with all of the premium content that keeps the masses listening.

Stock position: Long.

Comments

[marcopolode...:]

you can bet all your money, apple will make the jump. it is in its bets interest to own SIRI. It will well the best divice with the best content.

2008 Aug 15 07:42 AM

[voteforsanjia:]

Just for speculative purposes, the day Clear Channel and the FCC fascists get their meat hooks on SIRI I will sell all and rip my Satradio out and piss on it. In the unlikely event that this would be seriously entertained, I'd encourage all investors to send a strong message to the SIRI board that this is unacceptable and that it will be reflected at executive officer voting time. Long live one of the only remaining uncensored freedoms in the post 911 US that is an independent SIRI.

2008 Aug 15 09:27 AM

[rossscs:]

Now of course comes the enormous task of convincing Wall Street that satellite radio is a profitable enough business to keep the naked shorting wolves at bay.

I some how thought naked shorting was illegal...

2008 Aug 15 11:03 AM

[voteforsanjia:]

Naked shorting should be illegal across the board. If some investment banker wants to bet against a company, fine, but they should put their money on the table at that time and not be playing games with shares that are held in other funds by that company or those that people are being mislead into thinking they have purchased and are otherwise not available for manipulating the market with. If it weren't so damaging to companies it would almost be funny to see the SEC so quick to act to protect it's own children such as Fannie Mae but not take on the bigger issue. I guess we really all know who runs that show, and it ain't the taxpaying US investors.

2008 Aug 15 11:21 AM

[egiscoder:]

Who needs the iPod to inherit Sirius capabilities? The Stiletto 2 does EXACTLY that. I can see the value of adding SiriusXM to the iPhone, but the iPod is overkill.

2008 Aug 15 11:35 AM

[kris23:]

I've actually never though about adding it an iPod/iPhone. That seems like a really good idea to me. The one thing that stopped me from purchasing a SIRI radio is the actual receiver looks complicated to use and to install. Having it on iPod would just make more sense. Although, I agree, I dont really see Apple heading in that direction anytime soon,
Also, the main problem with SatRadio and Wi-Fi in your car is that these two subscriptions appeal to different consumers, with some small overlapping. Why would a single driver commuter purchase Wi-Fi they would never even be able to use? All those single drivers you see every morning on the way to work-thats who SIRI appeals to. Families are gonna be more into unneccesary (IMO) Wi-Fi in the car.
100% believe its not going anywhere? Being a bit dramatic here I think. I highly doubt anyone, including Mel would of stood so strongly behind this pain of a merger if people though SatRadio was "going nowhere."

2008 Aug 15 02:03 PM

[sailboat:]

Can someone post a link showing that short interest has been cut in half "recently", as the imformation I have shows it has almost doubled.

2008 Aug 15 06:00 PM

[borderman:]

Siruis Stiletto 2 is easy to use even more so then soem TV remotes. It also carrys music like the Ipod and can
download music with one push of a button right off
a Siruis channel. I've got both and for me the Stiletto
is as easy to use as the IPOD.

2008 Aug 15 07:37 PM