Siri starts to pay off!

Thank goodness I'm lazy!

Published on October 6, 2004 By Draginol In Business

About a year ago a friend of mine was telling me how satellite radio was going to be the next big thing and that I should buy stock in a company called Sirius Satellite. I'm pretty conservative as an investor, but in a moment of recklessness my wife and I put a considerable chunk of our savings into the Siri stock. The stock didn't do as well as I had hoped but I continued to believe that I should stick with it.

This past summer, I even had a screenshot of me lamenting my decision to buy Siri since it had not gone up as well as I had hoped and seemed to be on the decline. But I never did get around to selling it and low and behold, today Howard Stern announced he was going to be going over to Sirius Satellite next year. A huge boon for the up and coming company.

My view is that over time, more and more "stuff" is going to be sent via satellite to cars and households. With XM Radio nearly its peak, Siri seemed like a good long term bet. So today's big stock jump was a welcome surprise. So I guess sometimes it's good to sit on ones stock.

Comments

mgosh

on Oct 06, 2004

I totally agree with your article. I was recently listening to the AM radio about a month ago when SIRI was down to about 2.40 and a radio "investor" stated that the stock SIRI was a lousy investment and that the stock isn't generating a profit. The stock has a negative P.E. and during a weak economy I can easily see the stock going to 1. His recommendation even though the stock went down from 4 to 2.40 was for people to sell and bail out of it. I decided that the company was a good company and I believed in the product. I looked at the longer picture and said ok it could go down even more, but it could go back up again. I will hold the stock and see how it performs in the future, and now today the stock is 3.87. With Howard Stern in SIRI I can definetly see good things for SIRI's future. Also I noticed when I went to the local theater I started hearing sattlelight radio advertisements. This showed me that they are being aggressive in their marketting. I am glad that company is on the move and the move up!

Solitair

on Oct 07, 2004

For an interesting look at how the digital radio market is moving elsewhere, it's worth examining the UK market. Over here digital radio is common and pretty much free. Many normal stations also broadcast on digital radio and there are plenty of digital only radio station. Indeed there are target dates set for moving all radio stations across to digital to free up air ways. Digital radio players are common and can be purchased in any electronics store at a reasonable price. Indeed they always sell well coming up to Christmas. The major players (in term of stock market anyway) are the technology companies behind digital radio as oppossed to the suppliers and broadcasters because of the free nature.

Paul.

Gene Nash

on Oct 07, 2004

Okay, they're on Dish Network, they have the deal with Ford et al to be installed in cars, and they scored Stern. But they're still playing catch-up with XM and probably always will be. The price jump on the Stern announcement likely will not last, especially with Sirius being low on cash and having to wait more than a year for Stern. If Stern fans wait till he jumps before buying their equipment, it could be a long time before Sirius starts to see a payoff. Even then the best they are hoping for is to make back what they're paying Stern. The real payoff would come in drawing in other customers based on the Stern publicity and maybe signing other high profile talent in Stern's wake -- if the cash can be dug up. That could be a big maybe, with the same questionable return on investment And that's all assuming the American satellite radio market doesn't change drastically which is a very real possibility.

If this brought the price of the stock to anywhere near or above what I'd paid for it, I'd dump it.

Or you could just wait for them to run out of cash and get bought out by XM.

Draginol

on Oct 07, 2004

I think time will tell.

XM is around 30. Siri is only now getting around 4. I bought at 2.

GhoS

on Oct 07, 2004

Personally I don't see Satillite radio reaching the masses. It has its appeal for sure, but I really don't believe there is enough of a need for a pay service for radio. I think radio should be moving into the digital realm, but it sounds like the UK is on the right track. They are ahead of us for digital TV as well. I find it bad enough to have to pay for TV, I'm certainly not paying for radio. I have live with the ads once in awhile.
One last thing, there is no way I find Howard Stern to be a draw, but I guess I'm showing my age. I still don't find him entertaining, just vulgar and offensive. The NFL is more of a draw for Sirius I think than Howie.

Sacha

on Oct 08, 2004

Share prices cannot be compared between the two companies because SIRI has about 1.24 billion shares outstanding, while XMSR has about 205 million shares outstanding. In terms of market capitalization, both companies are valued within about a billion dollars of each other. SIRI is worth around 5 billion. The market is assuming they're going to be making quite a sum of cash in the future.

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