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Brandon Matthews (pseudonym) is the founder of SatwavesPro.com, which was borne of his desire to help retail investors after witnessing the continually changing ways that Wall Street can cheat them. Brandon has worked for Monroe Parker Investment Bankers, Morgan Stanley Dean Witter, American... More
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  • The Next Leg Of Growth For Sirius XM 0 comments
    Apr 26, 2009 7:51 AM | about stocks: SIRI

    These days it seems, Sirius XM investors are so busy working out conspiracy theories that they tend to miss actual news when it's leaked by the company. In a recent article titled "Looking Back At What's To Come" I had embedded a CNBC interview between Maria Bartiromo and Greg Maffei in which the question was asked;

    "Thinking outside the box..., where does the next leg of growth come for this business?"

    One of the answers given by Mr. Maffei seems to have been overlooked, but it is imperative that we revisit it at this time.

    "The fact that you could have a certain amount of Satellite Radio which was free and available to all, not necessarily premium."

    Finally! Speculation regarding a new chip patent that was approved 1 year ago, had made the claim that Satellite Radio could be broadcast as a subscriber based service with the added functionality of being able to provide a free ad supported format. This is actually the first time the company has spoken of it, as previously it had only been rumor and supposition on the part of blog posters.

    With nearly as many inactive satellite radios on the market as there are subscribed radios, it appears that Sirius XM has found a solution going forward. Mr. Maffei defined the potential as "a certain amount" which begs the question of just how many receivers this entails. More likely than not, millions of radios have likely integrated this chip, even prior to its patent approval which had been filed on November 20, 2003!

    I would surmise that the integration of this technology has already made its way into most of Sirius XM's proprietary portable receivers. It can take up to 5 years however to integrate new technologies into the OEM sector. That's not to say they aren't there in like numbers, just that it is less likely to have penetrated as deeply. With nearly as many unsubscribed radios as subscribed in existence, the opportunity for growth through national advertising is certainly a positive. Upgrades to the subscriber based service are more likely as the ad supported format is likely to contain less content than the subscribed service.

    Position: Long SIRI

    Stocks: SIRI
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