Wall Street sees two companies with iffy balance sheets, gobs of share dilution, and mounting losses, and it can't fathom why XM and Sirius would be willing to pay so much to acquire radio listeners who shell out a mere $12.95 a month.
fool.com
Gee, Not much seems to have changed in the last 3 years. Except that it seems that Wall Street has finally wiped the fog from their eyes and now sees this whole thing as yet another bad subscriber based business plan. CPGA too big/ ARPU too small. Low cost of content was the reason they were going to make fortunes, now it's the reason the can't achieve Positive Cash Flow. Millions and millions of shares have been diluted, even though the bulls on this board said to was not going to happen.. And of course.. These companies were going to be wildly profitable by 2006. Now we just move the line out a couple of hundred yards and claim that they gold mine is just over the hill.
Not much has really changed? Now has it.
Now, new delivery methods are coming on line. Like MediaFlo from Qualcomm. Over 20 Video Channels, and tons of audio channels that will be integrated into every Cell Phone Chip they build. At almost no additional costs on the hardware side. Nationwide coverage using high power 500kw transmitters. The truth is.. They don't need satellites. Before you know it, they will have it integrated into every SUV and Mini-Van who has kids to entertain. The ARPU will be low, but the CPGA will be almost nothing.
Like I said years ago.. These companies are like the satellite phone stocks of yesteryear. You spend Billions bulding a satellite network, to only find out that the whole thing can be done via terrestrial. But, the debt remains.
I'm not sure why the Street can't take the logical step of figuring out what these companies will look like in the future. Just as your cable bills creep higher every year, XM and Sirius will likely be charging more in the future. Tack on premium offerings and next-generation receivers that will blow the earnings potential through the roof --
I'm not sure why this sucker can't take the logical step of figuring out what in the heck he is talking about. Your Cable Bill creeps higher every year because they have a monopoly in each town. Maybe he can equate it too Cell Phone companies who live in a compeditive environment. Where the Bill keeps getting smaller and the minutes keep getting larger! The mobile entertainment market is just getting started. And the competition is going to be fierce. Sorry folks.. No Cable Company here.
Just another popsicle stand.
And so it goes,
PCSTEL |
