XM Satellite Radio Holdings Inc. (XMSR) Message Board

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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR)

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To: i-node who wrote (420)	11/26/2002 2:24:56 AM
From: pcstel	of 3386

You seem to be thinking these subsidies go on forever. You do realize that, over time, the subsidy decreases and eventually should go away altogether? No I guess I don't. As a matter of fact, I can't think of a highly subsidized subscriber model that the subsidies ever went away. Can you? So what you are saying is that there is no "high margins". Only speculative future "high margins"? I buy a new car every 3-4 years. So assuming only a $120 dollar subsidy on a factory installed unit. Every 3 - 4 years you are going to require a new subsidy when you buy a new car with XM factory installed. $120 dollars at 14% Cost of capital over 4 years adds up to be about $200. So in 4 years XM gets $480 in revenues, and the subsidy costs them $4.14 per month to recapture. Then just when they have recaptured your subsidy. You buy a new car, and the whole subsidy game starts all over again. I will agree on one thing. This model really requires "no subsidies", or higher ARPU. Like I have said. CPGA (as an analyst calculates it) is too high, ARPU is too low! PCSTEL

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