Putting a positive spin on the article, I'd say CDRD got some great exposure from a journal a/k/a the "shorters rag". Did anyone check the PUT volume this past week? Well, this week will be interesting! Here are some excerpts from Barron's.........
Monday, December 22, 1997
New venture rides high on the promise of commercial-free radio
By Andrew Bary
Did you ever wish you had put money into the cable-TV industry 20 years ago? Well, apparently a lot of investors do, and now they're trying to get in on a similar development in the nation's radio system, one that could allow listeners to get 50 channels of commerical-free music, news and entertainment for an upfront fee of about $200 and a monthly charge of $10 or so.
The company behind this ambitious plan is CD Radio, a Washington-based outfit whose shares trade on Nasdaq. This year, as enthusiasm for the radio scheme has risen, the company's share price has more than quadrupled, to $17 a share, giving CD Radio a market value of $260 million.
That's a big number for a company that has only 11 employees and won't see a dime of revenues until its system is up and running in late 1999 -- at the earliest. But you won't hear any lack of confidence in the voice of CD Radio Chief Executive David Margolese, who owns a 12% stake in the firm. "Will people pay for something they now get for free? Look at cable TV," he says.
Margolese says that independent market research shows CD Radio could attract millions of subscribers within a few years. He points to the success of a commercial-free in-home service called Music Choice, available over cable and satellite-TV systems, with 3 1/2 million subscribers. And over at Merrill Lynch, which has been helping CD Radio raise funds through stock and bond offerings, analyst Thomas Watts is already predicting that the company will earn $7 a share on a fully diluted basis in 2003, rising to $20 in 2007 as the subscription base hits 11 million people.
"This company is going to revolutionize a stodgy industry. Radio technology hasn't changed in 50 years," says Paul Stephens, chief investment officer of Robertson Stephens, which is one of CD Radio's largest stockholders, with a 12% stake. Stephens says the stock could hit a whopping $300 per share by the year 2004, when he projects the company will have eight million subscribers and generate $1 billion in revenues. The high 70%-plus margins on new subscribers after break-even will make CD Radio a money machine, he says. At $300, it should be said, CD Radio would have a market value of $8 billion, on a fully dilutes basis, double the estimated value of DirecTV, which already has three million subscribers and $1 billion in revenues. |
