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Sirius stock, Do you think it will do well??
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| Sirius stock, Do you think it will do well??
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| Darthvedder |
| I'm a little worried about the stock..... I have a fair amount, but I'm a little worried that they are over paying Howard.... The company is still in the red, yet he made 200 mil this year alone.... and that's just one guy. Who knows ho wmuch that fag Ralph makes??? He's on every f-ing show |
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| EatsLikeArtie |
| It might be worth something in 5 years, maybe if you are lucky Howard will go 5 more years. |
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| SteelRat |
I think the company will do well, but it's going to be hard for anything to make the price grow much anytime in the near future, because such high expectations are already built into it.
I would like to have had a bunch of shares at $3 like Howard, that's for sure. :) |
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| mdp6 |
| Maybe down the road it will be, alot will depend on how many more subscribers they keep pulling in. I don't think its going to make you rich quick though, but you never know. Thats the beauty of the market. |
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| MOTORCITYMADMAN |
| I'm in - as I stated in another thread, take a look at what Stern and Karmazin did for Infinity........it will take time, yes, but the return will be there......good luck! |
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| jon01 |
| it better do well. im in at $4 a share! |
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| snappy |
| i think it will be fine- i own shares and im not worried.. it'll just take some time |
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| blankstare |
| If it drops a little bit more - I'm in. Closed at 6.20 today. |
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| hewhorocks |
| Bottom line it's an excellent product with only one other company in competion in a market that is cutting edge. It's an exciting place to be , especially if you are a subscriber. Don't bet the farm but go for it! |
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| Carnival Man |
| I made a few bucks off of Infinity before Mel left... I think you can count on it making money by the end of the year! ;) |
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| ArtiesWingman |
| Sirius needs to get its shit together with getting units to people who want them, if they close in on XM by the 3rd quarter look for sirius to become the top stock.... if sirius is 6.20 or so, and xm is up at around 25 or better look for sirius to shoot up there as they start to become the dominant company... investors are underestimating howards impact only because sirius is supplying enough units |
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| TheJuice777 |
| Sirius is big time in the red, and needs a find a way to decrease their huge costs. Their profit margins remain steady in the negatives, and it has not been proven that satellite radio can turn over a profit. This next year will be a critical point in the future of the technology. |
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| iam72hrstv |
Stern 4 Billion Dollar Man - Sirius Adds 4 Billion in Market Cap Due to Howard Stern. (post #303)
(Copy of Open Letter sent to Howard Stern via email)
Stern 4 Billion Dollar Man - Sirius Adds 4 Billion in Market Cap Due to Howard Stern.
Howard,
Take a look at this article. You may have a large contract but Sirius investors cashed in when Sirius Market Cap grew 4 billion Dollars since you signed on...
Say It Ain't So, Howie
By Rick Aristotle Munarriz (TMFBreakerRick)
January 12, 2006
Howard Stern is worth every penny. That's my first point, and it will be my final point, too. I say this because some satellite-radio investors are a little hesitant after Sirius Satellite Radio (Nasdaq: SIRI) filed a prospectus with the Securities and Exchange Commission on Wednesday, a move that allows it to begin selling the 34.4 million shares made available to Howard Stern and his agent last week.
Stern has earned the stock. It was part of his $500 million five-year deal, and that $110 million chunk of stock that's now worth $210 million is his for the cashing. Stern is receiving the stock portion early because the company surpassed the subscriber target that would have triggered the release.
This doesn't mean the shares were dumped yesterday. Nor does it mean that the stock will be sold tomorrow. If a sale happens, it's likely to be in manageable lots. Not that it would upset the balance of things, given that Sirius trades an average of 75 million shares a day.
The concerns are legitimate, though. Sirius has a huge amount of shares outstanding -- 1.3 billion common shares and another 501 million that the company has reserved for issuance related to its convertible debt, warrants, and employee stock options. Putting another $210 million worth of stock in the public float -- if Sirius were to sell the entire position in the open market -- is certainly not ideal, though it may help stave off some volatility in the future. But until that happens, the uncertainty will hang around like a pesky houseguest who won't take the hint to leave.
What if there were no Howard?
Sirius investors should probably be grateful that these shares exist. Where do you think Sirius shares would be sans Howard? That's something worth contemplating, because if you don't think Stern is worth every penny -- and share -- that Sirius invested in him, it's easy to go back in time and silence the naysayers.
The day that Stern's signing was announced, Sirius shares leapt so high that the company tacked on $1 billion in market cap. Even with the recent weakness, the stock has added $3 billion more in market cap. How much of that is related to Stern? A lot more than you may think.
Shares of rival XM Satellite Radio (Nasdaq: XMSR) closed at $29.48 the day before Stern announced that he would be turning to Sirius once his deal with Viacom (NYSE: VIA) ran out. That's pretty much where XM is trading today. So one stock has added $4 billion in value while the other hasn't budged. Is it all because of Stern? Most of it, yes. The signing of Infinity radio programming guru Mel Karmazin may have helped give Sirius a little prestige along the way, but it's mostly about Stern's name and what it means to the satellite-radio company.
Not that Sirius has shown the greater fundamental spurts along the way. Let's take a look at some of the numbers:
10/5/04-1/11/06 XM Sirius
Share price gain 0.1% 82.7%
New subscribers 3.5 million 2.6 million
Monthly rate increase 30% 0%
Channels added 30 5
If I have to take Stern to task, it's that during his press conference on Monday and Larry King's show over the weekend, he made it seem as if the migration of his fans was single-handedly responsible for Sirius' net subscriber base growing from 662,289 members the week before he signed on to 3.3 million at the end of last month.
Not so fast there, Howard. I know I went with a Sirius subscription in 2004 because of the Stern factor, but how do we explain that since Howard inked his deal with Sirius, more consumers still opted for XM? The tide changed this past quarter, with Sirius winning its first quarter against XM, but most of the gains until now were just the natural progression of 6.1 million more terrestrial-radio listeners getting fed up with ad-laden music channels, thin playlists, and a lack of variety, and going the satellite route.
I'll give you $2.50 for the Wack Pack
One can argue that if Stern weren't in the picture, XM had the improved fundamentals over the past 15 months. XM added more subscribers and more channels, and it was even able to raise its subscription price from $9.99 to $12.95 a month. You also have some pretty tempting partnerships on the XM side. It has teamed up with Napster (Nasdaq: NAPS) for a joint-subscription service. Its service plays on JetBlue (Nasdaq: JBLU) flights. It has hooked up with Time Warner's (NYSE: TWX) AOL on a slate of streams. It even scored with Audible (Nasdaq: ADBL) on a portable-listening-device venture. Sirius has been brokering deals, too, but not so many outside the automaker ranks, where XM still commands a thin lead over Sirius.
Put in that context, perhaps Stern is worth even more than the $4 billion appreciation gap that's opened between the two companies since Oct. 5, 2004. At the very least, he is worth every penny of that original $500 million deal, which is now more like a $390 million cash/$210 million stock deal.
That's why XM was recommended to subscribers of the Rule Breakers ultimate growth newsletter service back in the fall. It was my call. As much as I love my Sirius subscription and can appreciate that the whole world is underestimating the true potential of satellite radio -- and both of its players -- XM just offers the better value as an investment at the moment.
If I'm right about satellite radio, investors are going to love the landscape by the time Stern wraps up his contract with Sirius in 2011. The subscriber base of both companies will be well into eight digits, while their market caps are likely to creep into 11 figures. Prices will have inched higher than $12.95 a month, just as your satellite television and cable TV bills have over the years. Subscribers will be buying premium content and ordering everything from digital downloads to sponsored products as well. Satellite radio will become an indispensable appliance.
Yes, the valuations appear lofty to those worried about red ink and liberal stock issuances. In the long run it may all seem petty, like $500 million for Stern. In retrospect, though, he will be worth every penny. All 50 billion of them. And counting.
XM is an active Rule Breakers stock pick. If you want to check out the other 31 growth stock selections that David Gardner and his team of analysts have made, do consider a trial subscription to check the service out for free for the rest of the month.
JetBlue and Time Warner are Motley Fool Stock Advisor picks. Click here to take a closer look at Tom and David Gardner's longtime newsletter service.
Longtime Fool contributor Rick Munarriz is a Sirius subscriber, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. |
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| evrc1ear99 |
The whole problem with Sirius stock is that there is too much out there floating around...1.3 billion I think I saw the other day? XM has something like 200 million...
Basic economics...supply & demand.
Also, what has been noted is that they are very very far in the debt.
Get rich quick? No...buy now if it goes below $6? Definitely!
Hold onto it for a few years and you'll at the very least double your money based on subscriber projections and the development of technology around Sirius and satellite radio...
I don't think this is going to be a Microsoft thing...but you never know. |
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