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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR)
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To: pcstel who wrote (412)11/25/2002 11:34:09 PM
From: i-node  Read Replies (1) of 3386
 
Only tough to determine because they don't provide the metrics. Yet tell you Churn is "Very Low" but won't provide those metrics either. Show subsidies of 11.8 million and Sales and marketing expenses of ~37 million and yet tell you the cost to acquire the 64,000 subs was only ~7.5 million?

The problem with these so-called "metrics" is that they are not defined in any reasonable manner. GAAP doesn't stipulate the meaning of these terms, and as a result, a business is free to define them however they want to. That's why we, as CPAs, are picky about terminology.

For accounting purposes, we require the expensing of marketing costs. But for purposes of reporting non-accounting statistics the company may well decide that marketing expenses benefit the current period as well as some future period. The company has every reason and right to do so.

My point is, the "metrics" you mention are just someone's determination of what is important to THEM, and these items have no specific accounting meaning (thus the reason for requesting you clarify YOUR meaning of the word "churn"). In that sense, they are a true "metric" only within the scope of the reporting entity and cannot be compared from one entity to another, UNLESS all entities choose to release all the information required to compute these data.
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