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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR) -- Ignore unavailable to you. Want to Upgrade?

To: verdad who wrote (363)	11/21/2002 11:48:30 PM
From: pcstel	Read Replies (1) \| Respond to of 3386

I agree the outcome of the OEM market (particularly what percentage of new GM vehicles equipped with XMSR are activated in Q4 2002) will make or break the outlook going forward I don't think the OEM market will make a difference! The business plan is flawed. It doesn't matter how many customers they sign up. Look at the metrics from the latest 10-Q. "We recognized revenue of $5,552,000 during the three-month period ended September 30, 2002, " "As of September 30, 2002, we had 201,554 subscribers, an increase of 64,836 from June 30, 2002 or 47%" "Average monthly revenue per subscriber was approximately $9.68 during the three-month period ended September 30, 2002" "Sales and Marketing. Sales and marketing expense was $35.7 million during the three-month period ended September 30, 2002," " We currently provide incentives and subsidies for the manufacture, purchase, installation and activation of XM radios in order to attract new subscribers. Consequently, our subscriber acquisition costs are significant, as they totaled approximately $11.8 million during the three-month period ended September 30, 2002, compared with $1.3 million during the three-month period ended September 30, 2001. We consider subscriber acquisition costs to include radio manufacturer subsidies, certain sales, activation and installation commissions, and subscriber product- and hardware-related incentives. Subscriber acquisition costs do not include media advertisements, ongoing loyalty payments to retailers and distribution partners, payments under revenue sharing arrangements with radio manufacturers and certain guaranteed payments to General Motors." Notice the don't provide any CHURN metrics, but just provide Net Adds. Since they don't provide CHURN metircs or Gross Additions it's hard to calculate CPGA. But just Subsidy Per Net Add at 64,836 was $181. Not including that 35.7 million in sales and marketing. If you include that number, Cost Per Net Add was something like $732 per Net Add. If we gave them a "guess" of Churn Metrics of 4%. That would indicate Gross Adds of about 79,000. CPGA would then be about $600. Sorry, but a CPGA of $600 with a non contract ARPU of $10 is a sure bet to Bankruptcy. The problem with the OEM's is that they will be subsidizing radios in cars who's owners may never subscribe. The subsidies will kill this company. It's like giving away a razor that costs $200 to make, and saying you will make it up on the blades that sell for 1 dollar each. Subsidies too large, ARPU too small. It's a zero! Even if it had No Debt! Wireless Service Providers look like Gold Mines compared to these companies. PCSTEL