Serious Breakdown of Sirius Satellite Radio Thomas Catino 07/05/2006 9:30 AM EST
http://www.antandsons.com/aheadoftheticker/siriusradio_070506/ Shares of Sirius Satellite Radio (Nasdaq: SIRI) have certainly been riding some rough waves recently. While the fundamental picture has looked bright for the company, major institutions and brokerage houses have continually remained skeptical that Sirius would not live up to its high expectations. Even though the company reiterated its earnings guidance, shares collapsed along with the major market averages in late May. Even CEO Mel Karmazin's million share buy of Sirius stock failed to be the impetus to move Sirius stock higher. Through out the month of May, Sirius was shown no love, continually hitting new 52-week lows. The downturn continued to stun investors because just earlier that month, the company announced strong first quarter 2006 results which included record market share of satellite radio net subscriber additions. But the markets did not reflect the strong fundamental posititon as Sirius went on to lose billions of dollars in market cap value. There was no obvious reason why Sirius shares declined because there were no revisions in analyst expectations, no insider selling or changes in the Sirius business model. Though competitor XM Satellite Radio (Nasdaq: XMSR) had slumped and the market indices were dragged lower by inflation concerns, Sirius fundamentals remained the same. In late June, however, investors flocked to shares of Sirius. The stock traded actively and just days ago, hit a short-term peak of $4.76 on extremely heavy trading. Shares of Sirius are finally moving higher after investors have taken notice of significantly overlooked news. On June 20, Ford Motor Co. (NYSE: F) announced that in 2007, it would double its automobile models available with a navigation system and quadruple the number with Sirius satellite radio. This move was in response to a strong consumer trend towards demand for navigation and satellite radio devices, indicating clear momentum for the growth of subscriptions to Sirius services. Why investors did not notice this earlier is unclear, but Sirius shares began to recover some of the nearly 50% market value that it lost in the last eighteen months. Looking ahead, Sirius' future depends on the growth and evolution of the satellite radio industry. But one thing for sure is that Sirius wants to remain a competitor in the market, if not the dominant player. In an early morning conference call on June 26, CEO Mel Karmazin said that he would like to buy competitor XM Satellite Radio (Nasdaq: XMSR). He specifically told those in attendance that "we'd love to buy them. Price would matter, so that would be an issue ... (and) there would definitely be the regulatory issue." As outrageous and unlikely as it seems, Karmazin's words are an indication that Sirius is not to be taken lightly. Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
