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

To: i-node who wrote (498)	3/28/2003 12:15:49 AM
From: pcstel	Read Replies (1) \| Respond to of 3386

This is nonsense. While today, it is a fact, that SAC amounts to about 100% of the first years' subscription revenue Not really, The subsidy is only a portion of calculated CPGA costs. In a typical subscriber model. XMSR's CPGA is in excess of $400. wirelessreview.com At 14% cost of capital these CPGA figures cost you ~ $4.60 per month (Interest Only) out of $9.90 in ARPU. TODAY, the subs from 1 year ago are paid for. Unfortunatly! This is not the case. The ARPU from subs from 1 year ago barely covers the cost of capital whose principle was paid in advance by XMSR to acquire them. That is why I keep telling you. ARPU is too Small. CPGA is too big! This statement is utter nonsense. Well, maybe! But, if you look at the operating metrics so far, you will find that this is a valid statement. From that point forward, this company generates cash at an impressive rate. With 10M subs, well within reach over the coming several years, you're looking at a billion and a half a year (including ad revenue). Now, if it costs a billion to get those subs in hand, who cares? OK! If you say so! When you've sold 10M radios, the cost of adding a sub will be measured in dollars and cents, not tens of dollars. (It's called Economies of Scale, you may have heard of it). Verizon has sold over 80M handsets to date. Their subsidies still average over $125 dollars. Economics of scale and all! BTW! Keep you eye open for the Spot Secondary! It's a Zero! PCSTEL