GJELOSH197's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/212465/comments http://seekingalpha.com/article/87870-sirius-xm-complete-merger-investors-still-blue?source=feed#comment-218135 218135 Wed, 30 Jul 2008 08:19:03 -0400 http://seekingalpha.com/article/87604-significant-value-in-combined-siri-xm-from-merger-synergies-citi?source=feed#comment-217207 217207 Tue, 29 Jul 2008 08:46:27 -0400 http://seekingalpha.com/article/86417-apples-samsung-order-may-benefit-sandisk?source=feed#comment-212177 212177 Wed, 23 Jul 2008 08:22:37 -0400 http://seekingalpha.com/article/83804-georgetown-partners-latest-radio-proposal-raises-many-questions?source=feed#comment-200465 200465 Tue, 08 Jul 2008 08:25:13 -0400 http://seekingalpha.com/article/83804-georgetown-partners-latest-radio-proposal-raises-many-questions?source=feed#comment-200121 200121 Mon, 07 Jul 2008 16:08:43 -0400 http://seekingalpha.com/article/83804-georgetown-partners-latest-radio-proposal-raises-many-questions?source=feed#comment-199993 199993 Mon, 07 Jul 2008 13:47:53 -0400 http://seekingalpha.com/article/60398-sandisk-risk-down-3-reward-up-30?source=feed#comment-198636 198636 Fri, 04 Jul 2008 13:45:31 -0400 http://seekingalpha.com/article/79801-sigma-better-designed-for-2009?source=feed#comment-196254 196254 Mon, 30 Jun 2008 20:49:02 -0400 http://seekingalpha.com/article/83088-why-did-satellite-stocks-head-north-friday?source=feed#comment-195746 195746 Goldman's Sirius Call: Solid Thesis, Poor Timing
by: Mike Stathis posted on: June 29, 2008 | about stocks: MSFT / SIRI / SNE / XMSR / YHOO

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I just wanted to make something clear with all this talk about satellite radio. I'll be blunt. It's going nowhere. That is why I haven't followed Sirius (SIRI) or XM (XMSR) for several years. Why waste my time when I know how the game will turn out?

Let me explain. After releasing a research analysis on the sector in my newsletter in 2004-2005, I have not bothered to follow the satellite radio stocks because I already knew their longer-term fate. It's the same action I have taken on other companies that I predicted would go bankrupt or be sold on the cheap. And I have been right about all of them. It's not that I have a crystal ball or that I'm amazingly clever; it's just a matter of using some common sense combined with an understanding of business dynamics and competitive forces. I will summarize the main points of the 2004-2005 analysis I made on Sirius and the future of satellite radio:

Sirius will not make it. It will either go under or be sold on the auction block. Why? The industry has poor business dynamics as a standalone. It has high churn, short retention, and high customer acquisition costs. Only a diversified company can remain in this business. The wireless providers realized the need to secure a certain level of guaranteed revenues and they came up with contracts. The satellite radio business has not structured any value into their business that would allow them to drive revenues on a contractual basis. As a result, revenues are highly uncertain and will remain volatile, while net revenues per subscriber have little room for growth due to the high churn.

The enormous debt seen in Sirius and XM is just one indication of the poor business fundamentals of this quasi-sector. Just look at the profit and operating margins. These guys won't be able to turn a profit until they surpass 20 million subscribers. And that simply is not going to happen for a very long time if ever. As it stands today, Sirius is in much deeper trouble than XM. The company self-destructed by giving away most of its equity to its CEO and Howard Stern, as if the stock had little value.

It turns out that it didn't have much value. Even Stern apparently realized this and sold his stock.

While XM is fundamentally stronger and will emerge the winner, this won't last long. The big guys in media will force XM out when Internet is installed in autos which is coming in a few years. Yahoo (YHOO), Microsoft (MSFT) and others will offer free Internet radio as a way to seize the market. Then they will offer a paid service similar to satellite. This will steal away the customer base of the satellite providers. In the meantime, earnings from their other business lines will enable them to endure difficult transitional periods. If needed, the big media players will create a price war which Sirius and XM will not survive.

The only one's who will profit from Sirius are the CEO and Stern.

Things are playing out just as I predicted. Soon you will see how even the XM-Sirius combined entity gets destroyed when Internet radio enters the scene. The only thing that has changed in the four years since my report is that Yahoo has weakened and may not go forward with an Internet radio platform, at least for a while. But you can bet others will. If you do not understand the media war that has been going on now for several years, you really need to get up to speed. The big players in this war are Microsoft, Sony (SNE), Yahoo, some of the telecom and cable providers. The XM-Sirius entity will ultimately have to go up against these guys and they aren't going to win.

Now, will the combined XM-Sirius entity appreciate in price from here? I wouldn't doubt it. After all, many companies on a downward trend make short-term bounces. But that might only provide an exit for existing shareholders, as the odds of satellite radio surviving long-term are very slim. Internet radio is the future. And the only way satellite will play into the picture is through satellite-Internet radio, which will be a free service, with an optional paid service for no commercials. Once the paid service of XM-Sirius is knocked out, only then will the paid service model be a growing entity. And the only role XM-Sirius will play in this might be after being bought on the cheap by one of the big players.

You can bet Sirius is desperate for this merger to go through because they realize they're on their last leg. It's similar to the situation with Blockbuster (BBI) practically bending over backwards to merge with Circuit City (CC). Unlike XM, Circuit City has something to offer-a real business with a long history of profits and no debt (only seasonal borrowing or inventories). You can probably tell how I feel about any possible Circuit City-Blockbuster deal. But that's another story.

Only time will tell if I was completely right in my analysis. But one thing is for certain: those who read my report 4 years ago (quoted above) had a chance to bail out of XM and Sirius at $25 and $7 respectively.

Sirius was never a stock held by a large percentage of institutions because they realized the risks. I continue to notice the same investors who buy terrible stocks like Sirius have a habit of buying trash like Krispy Kreme (KKD) and a host of others. People, if you really want to play this investment game, you need to start figuring out these things on your own. Otherwise, leave the investing game to the pros because the really sharp guys out there know what's going on and they sure aren't going to tell you. And you cannot count on Wall Street to help you. While the Goldman analyst is dead right, I find it remarkable it took him so many years to issue this report. I'm not sure whether he just isn't that bright or his focus was on landing banking business. Most likely, it was the former since I still have not read any report that provides the insight I have.

Wall Street makes sure investors have a misguided sense of reality by issuing so many "Buy" ratings. Everywhere you look you see "experts" talk about how good it is to invest in the stock market but you never hear timely warnings when you should get out and wait for the next bull market. The refusal of Wall Street and those who control the media to even hint that there might be a period of a few years when you should stay out of the market is the reason why most investors get caught in bear markets.

Going forward, if you want to have a chance as an investor you're really going to need to change this mentality. Otherwise, the "do-it-yourself" approach is going to result in a disaster for many. Remember, the promoters of this fantasy – the online brokers – are just as guilty of this deceit as Wall Street. And they are making profits selling you this epiphany. So you might be better off buying ETFs.

Disclosure: None ]]> Mon, 30 Jun 2008 08:45:59 -0400 Goldman's Sirius Call: Solid Thesis, Poor Timing
by: Mike Stathis posted on: June 29, 2008 | about stocks: MSFT / SIRI / SNE / XMSR / YHOO

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I just wanted to make something clear with all this talk about satellite radio. I'll be blunt. It's going nowhere. That is why I haven't followed Sirius (SIRI) or XM (XMSR) for several years. Why waste my time when I know how the game will turn out?

Let me explain. After releasing a research analysis on the sector in my newsletter in 2004-2005, I have not bothered to follow the satellite radio stocks because I already knew their longer-term fate. It's the same action I have taken on other companies that I predicted would go bankrupt or be sold on the cheap. And I have been right about all of them. It's not that I have a crystal ball or that I'm amazingly clever; it's just a matter of using some common sense combined with an understanding of business dynamics and competitive forces. I will summarize the main points of the 2004-2005 analysis I made on Sirius and the future of satellite radio:

Sirius will not make it. It will either go under or be sold on the auction block. Why? The industry has poor business dynamics as a standalone. It has high churn, short retention, and high customer acquisition costs. Only a diversified company can remain in this business. The wireless providers realized the need to secure a certain level of guaranteed revenues and they came up with contracts. The satellite radio business has not structured any value into their business that would allow them to drive revenues on a contractual basis. As a result, revenues are highly uncertain and will remain volatile, while net revenues per subscriber have little room for growth due to the high churn.

The enormous debt seen in Sirius and XM is just one indication of the poor business fundamentals of this quasi-sector. Just look at the profit and operating margins. These guys won't be able to turn a profit until they surpass 20 million subscribers. And that simply is not going to happen for a very long time if ever. As it stands today, Sirius is in much deeper trouble than XM. The company self-destructed by giving away most of its equity to its CEO and Howard Stern, as if the stock had little value.

It turns out that it didn't have much value. Even Stern apparently realized this and sold his stock.

While XM is fundamentally stronger and will emerge the winner, this won't last long. The big guys in media will force XM out when Internet is installed in autos which is coming in a few years. Yahoo (YHOO), Microsoft (MSFT) and others will offer free Internet radio as a way to seize the market. Then they will offer a paid service similar to satellite. This will steal away the customer base of the satellite providers. In the meantime, earnings from their other business lines will enable them to endure difficult transitional periods. If needed, the big media players will create a price war which Sirius and XM will not survive.

The only one's who will profit from Sirius are the CEO and Stern.

Things are playing out just as I predicted. Soon you will see how even the XM-Sirius combined entity gets destroyed when Internet radio enters the scene. The only thing that has changed in the four years since my report is that Yahoo has weakened and may not go forward with an Internet radio platform, at least for a while. But you can bet others will. If you do not understand the media war that has been going on now for several years, you really need to get up to speed. The big players in this war are Microsoft, Sony (SNE), Yahoo, some of the telecom and cable providers. The XM-Sirius entity will ultimately have to go up against these guys and they aren't going to win.

Now, will the combined XM-Sirius entity appreciate in price from here? I wouldn't doubt it. After all, many companies on a downward trend make short-term bounces. But that might only provide an exit for existing shareholders, as the odds of satellite radio surviving long-term are very slim. Internet radio is the future. And the only way satellite will play into the picture is through satellite-Internet radio, which will be a free service, with an optional paid service for no commercials. Once the paid service of XM-Sirius is knocked out, only then will the paid service model be a growing entity. And the only role XM-Sirius will play in this might be after being bought on the cheap by one of the big players.

You can bet Sirius is desperate for this merger to go through because they realize they're on their last leg. It's similar to the situation with Blockbuster (BBI) practically bending over backwards to merge with Circuit City (CC). Unlike XM, Circuit City has something to offer-a real business with a long history of profits and no debt (only seasonal borrowing or inventories). You can probably tell how I feel about any possible Circuit City-Blockbuster deal. But that's another story.

Only time will tell if I was completely right in my analysis. But one thing is for certain: those who read my report 4 years ago (quoted above) had a chance to bail out of XM and Sirius at $25 and $7 respectively.

Sirius was never a stock held by a large percentage of institutions because they realized the risks. I continue to notice the same investors who buy terrible stocks like Sirius have a habit of buying trash like Krispy Kreme (KKD) and a host of others. People, if you really want to play this investment game, you need to start figuring out these things on your own. Otherwise, leave the investing game to the pros because the really sharp guys out there know what's going on and they sure aren't going to tell you. And you cannot count on Wall Street to help you. While the Goldman analyst is dead right, I find it remarkable it took him so many years to issue this report. I'm not sure whether he just isn't that bright or his focus was on landing banking business. Most likely, it was the former since I still have not read any report that provides the insight I have.

Wall Street makes sure investors have a misguided sense of reality by issuing so many "Buy" ratings. Everywhere you look you see "experts" talk about how good it is to invest in the stock market but you never hear timely warnings when you should get out and wait for the next bull market. The refusal of Wall Street and those who control the media to even hint that there might be a period of a few years when you should stay out of the market is the reason why most investors get caught in bear markets.

Going forward, if you want to have a chance as an investor you're really going to need to change this mentality. Otherwise, the "do-it-yourself" approach is going to result in a disaster for many. Remember, the promoters of this fantasy – the online brokers – are just as guilty of this deceit as Wall Street. And they are making profits selling you this epiphany. So you might be better off buying ETFs.

Disclosure: None ]]> http://seekingalpha.com/article/82565-where-8217-s-the-bottom-for-satellite-radio-stocks?source=feed#comment-193527 193527 Thu, 26 Jun 2008 13:56:58 -0400 http://seekingalpha.com/article/82203-cowen-slams-goldman-on-radio-stocks-analysis?source=feed#comment-192205 192205 Tue, 24 Jun 2008 20:32:25 -0400 http://seekingalpha.com/article/81738-positive-radio-merger-outcome-about-two-weeks-away?source=feed#comment-188024 188024 Wed, 18 Jun 2008 18:45:30 -0400