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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR)
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To: Bill Keating who wrote (3181)2/2/2007 9:52:20 AM
From: pcstel  Read Replies (1) of 3386
 
Or maybe the market is thinking that even robust OEM installations won't be enough to save the industry. A million cars with factory installation is still only 500,000 subscribers. Is that enough?

Let's do the math. 3 million OEM installs at an CPGA of $100 costs you 300 million dollars, plus cost of capital. At a 54% "take rate" that nets you 1.62 million subs that agree to become an "Initial subscriber".

At 7.6 million subs and 22% annualized Churn you will lose 1.672 million "subscribers" to CHURN annually.

So given current management supplied metrics and trends.. You need to spend 300 million dollars annually in OEM CPGA.. Just to remain at "breakeven" on your subscriber numbers in the OEM market.

And neither one of these companies have much flexibility in their pricing structure, In my opinion.

And so it goes,
PCSTEL
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