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

To: pcstel who wrote (406)	11/25/2002 4:47:00 PM
From: russwinter	Read Replies (3) \| Respond to of 3386

<the subscriber industry at large and "professional investors" would calculate it.> I'm not trained as a security analyst (although I have been a redeveloper of vintage apartment buildings, and the model is similar: lose money initially to create a valuable asset in the end) so I process things a little differently. I call it the race to the finish line model: first goal is cash flow breakeven, second goal is generate substantial free cash flow. Since they are largely done with capex, I'm looking for effect on the balance sheet, so I'm going straight to it to look for burn rates. 3Q for XMSR still looks like crap because you have not just marketing but high fixed costs they need to pay for and cover. They added about 65k subs, and burned $88m. That's actually $1357/sub. But the expected 4th qt add is 150,000 subs, and according to the call the burn will be about $60m, or $400/sub. Then it should drop off very rapidly as they add about 200-225k subs per quarter in 03 (and even higher rates in 04). As the ramp up matures and the fixed costs get spread the metrics really improve. As you get towards breakeven and cash flow positive then the additional sub costs nothing on a balance sheet basis. Just like renting up your last apartment unit when the work's complete: you really don't give a rat's ass at that point as long as your cost to finished product came in at, or close to budget. And I feel the 200-250m to breakeven sets up a superlative free cash flow asset. <They refused to tell you what the Churn metrics are.> Valid point, they really skipped over it and none of the analysts even asked despite an extensive and open Q&A period. If it's 3% per month that's too high. I don't think it is that much, but must admit I can't find it either, and it will be important especially as the sub base starts to season. Maybe someone should call IR and just ask?

To: pcstel who wrote (406)	11/25/2002 9:18:22 PM
From: i-node	Respond to of 3386

From spacedaily.com The Crutchfield marketing research department conducted the study of 225 customers during October 2002. The survey population was a randomly chosen sample of Crutchfield customers who bought satellite radios before October 2002. Some 112 XM customers and 113 Sirius customers completed a detailed questionnaire. "We are pleased to be working with XM, with Sirius, and with the equipment manufacturers to bring this exciting technology to the public," said Alan Rimm-Kaufman, Crutchfield's Vice President of Marketing. "The early success we're having with satellite radio is encouraging." Respondents reported overwhelmingly positive views of satellite radio. 93% of Sirius customers and 95% of XM customers reported the sound quality was "good" or "excellent." 98% of Sirius customers and 95% of XM customers reported the technology was "easy" or "very easy" to use. 97% of Sirius customers and 98% of XM customers would recommend buying satellite radio to their friends and family. (note -- not a HUGE sample, but if these numbers are even mildly representative, it is a safe bet the "churn" figures are minimal). Customers volunteered enthusiastic praise for satellite radio programming. A Sirius customer from Georgia wrote, "It is absolutely the best investment I have made for my car, honestly. I like hearing the little tidbits about the different artists, too. Everyone who rides with me loves it just as much as I do... so I am good advertisement for it!"