To all the satisfied satellite radio subscribers,
I am glad you are enjoying the opportunity to be part of this trend and maybe someday I will change my mind about subscribing as well. That is, if these companies survive their 'burn rates'. Some great testimonials have been given and I have taken note. Thank you for taking the time to comment.
I am not convinced, however, that speculating on these companies from an investment perspective is sensible with all the other opportunities available out there. While many commented that traditional broadcast radio is awful and limited, the same is not true for your investment dollar.
Peace
Today I would like to add that the satellite radio industry may be around a for long time to come, but that it may not have the same form. Some readers commented that they enjoyed "commercial free" radio. Others commented on the early days of cable. I would like to remind everybody that one of the reasons people liked cable back then was because it too was commercial free in its early days. Now there are plenty of commercials on cable television.
As far as investing goes, these companies are in the highly speculative category and I'd therefore stay away. Many of my friends who heeded my advice last year to stay away from these stocks, are very pleased. If they now asked me again, I'd tell them the same.
I have not heard anyone talking (or writing) about a bankruptcy option, but it is entirely possible that these companies could go bankrupt at some point in time, perhaps letting another entity acquire them for cents on the dollar. If investors could be assured they would not go bankrupt, then maybe it might be worth throwing a few bucks (not food money) at them. More like a lottery ticket, just for kicks and maybe a great return -- MAYBE. But don't call it an investment.
Check out my other posts for BloggingStocks here.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
2-22-2007 @ 4:01PM
John Kujawski 111 said...
Mr. Liber,
Commercials make money for cable tv? How does NBC, CBS and ABC make money? The trick is to not over do it or do it appropiatly. As far as bankrupt goes, and I will repeat myself, as long as Mel K. is running the show and buying SIRI and not selling, I will buy or hold and not panic. Its negativity that keeps the share price depressed and Mel. has a long, proven track record in a tough industry of valuing shareholder equity. Please correct me if I am wrong. JPK
2-22-2007 @ 4:19PM
Sheldon L said...
JK:
1)Commercials make money - try and get a spot on the Sopranos.
2)Mel has stock options - is he putting in new money, I don't think so.
3)It's not negativity that is keeping the stock depressed - it's losing money in ever increasing amounts with no end in sight. It's being entirely subscription based with no advertising. It's paying Howard Stern $50 mil, like he would not work for $40 mil. AND it is competing opportunites for investors dollars which are better spent elsewhere!
4)Mel is great and maybe he will do better than most. However, he like anyone else will sink if standing in quicksand - do you want to be standing there with him?
5) Sounds to me like you own the stock and are hanging on hoping - and you may buy more to bring your invested dollar average down. BAD IDEA!
2-23-2007 @ 12:43AM
Lerone Williams said...
Bankrupt? Why do you include siri with xm? Do you guys actually read the books on siri? Stop making blind comments on sirius without reading their financials. Yes they're in debt but, just do your math and you'll figure out that debt and siri wont be mentioned in the same sentence within the next 2yrs. Man, I hate ignorance.
2-23-2007 @ 11:51AM
steve said...
It is obvious that you have not done your research on Sirius. The company is on a solid pathway towards profitability, much like PetSmart, whose stock floundered for several years, until they suddenly turned the profitability corner, taking the stock from 3.00 to 30.00 in a year. Sirius will be a mirror image of that, and you will look like a very poor horse trader.
2-23-2007 @ 12:11PM
Lerone Williams said...
Emil, you haven't done the math either have you? They did not pay more for talent then what they take in. DO THE MATH!
2-23-2007 @ 7:44PM
Sheldon L said...
Mr. Williams,
If you see something in the financials of SIRI that you think is worth bringing to anyones attention please share it and stop the immature name calling. The company is in the red and bleeding more cash every day. Subscriber growth is slowing for both companies. There will be no savings on any potential merger until after there is greater spending to blend the resources. To survive legal challenges they will have to spend substantially more on legal expenses as well. They will not see any savings, if they do, until a year after the merger, if they are still around. They will have to continue both operations independantly for now while they are separate because while I do think the merger is likely it is not a certainty and they have to support both sets of shareholders, customers, programs and technology. They cannot close down an accounting department or close down one board of directors or anything in between yet. You say it willbe great in two years but they may run out of cash in 18 months. This is not a deal necessity and the clock is ticking. They cannot survive separately under current conditions, the only question is whether they will survive collectively. One last point; companies file for Chapter 7 bankrupcy very often BEFORE they run out of cash as a means of protection to reorganize and survive.This might be a backroom play to get out of certain contracts that they should not have made and can't afford, think Delta, this is a possibility and not good for shareholders.
Peace