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

To: russwinter who wrote (407)	11/25/2002 5:08:53 PM
From: i-node	Read Replies (1) \| Respond to of 3386

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. Russ, I suppose this was the point of my previous post; the cost per subscriber is next to meaningless at this stage of the game -- first, because the rate "per" is changing so rapidly -- daily, almost, and secondly because it is tough to determine which "costs" are technically subscriber costs vs. those costs that are more startup or related to building a brand in nature...

To: russwinter who wrote (407)	11/25/2002 11:03:18 PM
From: pcstel	Read Replies (1) \| Respond to of 3386

They added about 65k subs, and burned $88m. That's actually $1357/sub. Well, you don't include OpEx, CapEx expenses in CPGA.. If you look at the definition... "CPGA - Cost Per Gross Add: Summarizes the one time cost per customer gross addition. CPGA is computed by dividing the sum of sales and marketing expenses plus cost of goods sold less equipment revenue, by the number of customer gross additions acquired during the period." Now let's look at what is consided a standard reporting of a subscriber based model. biz.yahoo.com The metrics we are looking for are all laid out for us.. No matter how bad they are. Gross additions 246,197 Deactivations 201,052 Net additions 45,145 Cost per gross addition (CPGA) $312 Equipment revenues 11,612 Cost of equipment (58,603) Selling and marketing (32,719) Overall consolidated churn was approximately 4.5%, And of course another very valuable metric.. Consolidated cash costs per user per month $21.10 Lots of info.. Gross Adds were 246,197 and cost of equipment was 58,603,000 and Equipment Revenues were 11,612,000. So net subsidies were 46,991,000. You divide the subsidy by the Gross Adds and you get calculated subsidy per Gross add of $190. Which BTW is similar to XM calculated subsidy in Q3. Now we look at Sales and Marketing Expenses. Sales and Marketing were 32,719,000. So we divide S/M Expenses by Gross Adds and we get $132. We add S/M expenses per gross add and subsidy per gross add $132 + $190 = $322 vs. reported of $312. So it's not an exact science but close enough for you to build a model out of. There it is. Pretty simple formula that is pretty standard for any subscriber based business. However, XM does not give you Churn numbers, or the metrics so that one can calculte churn and Gross Additions (only Net Additions), but they tell you Churn is "Very Low". So they know what it is. But, don't tell you? They also show 37 million in Sales and Marketing ($575 per net add) and almost 12 million in subsidies ($180 per net add), yet tell you Acquisition Costs were only $130? Does that sound correct? I mean were not even talking horeshoes and hand-gernades close! PCSTEL

To: russwinter who wrote (407)	11/25/2002 11:17:57 PM
From: pcstel	Respond to of 3386

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. So let's put this in perspective. If you were renting apartments for let's say $990 per month. And a prospective renter wanted you to provide $18,000 dollars in new furniture (were not talking TI's here) which would be his to keep when he decided to move to a new apartment. Would you do it? Now, to make it sound even more ludicrous. He's only going to rent on a month by month basis, no contract! And if you think that is bad, you have to go borrow the $18,000 at a cost of capital of 14%. Let's say you had 1,000 apartments like this, and offered the same deal to everyone who rented from you. How many banks would fund this business? PCSTEL