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

To: pcstel who wrote (517)	3/29/2003 12:59:35 AM
From: i-node	Read Replies (1) \| Respond to of 3386

These business concepts were devised and funded at a point in time in which capital was "free flowing", and venture capitalist would fund a business plan drafted in crayolas on the back of a Burger King bag. Implicit in this statement is the notion that the business plan isn't good or that it isn't being executed; both of these are obviously incorrect. I think you will find the analysts understand these problems, and are not impressed with the latest reportable quarters results. Honestly, I find the "analysts" understanding of these stocks to be weak, weak, weak. That said, they do continue to be positive for the most part. The downgrades have already begun. The only downgrade I've seen: "Deutsche Securities downgrades to Hold from Buy based on valuation; however, firm raises price target to $7.00 from $5.50 due to positive Q4 operating metrics, increased visibility into 2004, and a reduction in their private mkt value discount rate to 20% from 25%." That's about the weakest excuse for a downgrade I've ever seen. They downgraded, but increased the price target. I'll take a downgrade like this one any day. It's a fine line to walk. You grow subscribers too fast. You burn all your cash on subsidies and other CPGA costs. You grow too slow. You never make it to Break-even. Perhaps you're not looking at the same business I am. These people have been within +/- 5% of their sub targets every quarter. Sub growth has been phenomenal but precisely on target. The financing package clearly provided the cash needed to get to breakeven, SO LONG AS sub targets are met. If sub targets are not met, they have a reasonable provision in the form of a line of credit and the option to pay certain interest in stock. It seems awfully unlikely to me that they will fail to meet the 1.2M sub target this year--they know what the uptake rate is, and they know with almost certainty how many vehicles will be sold with factory units. Obviously, anything can happen -- but over the course of the last year and half I've come to see a management that operates with precision and does precisely what they say they will. They started the year with 350K subs so they need to get 850K during the year; they've gotten 130K so far, so they need 720K over the remaining 9 months. It is, to me, inconceivable that this won't happen given the ramping up at GM, Honda, and the uptake rate on the subs. In addition, prior to the Christmas season there will be new products out. If anything, I would expect the sub targets to be beaten. Delphi has clearly been taken aback by sales of the Sky Fi. In their words, "we're selling all we can make". This does NOT sound like a product that is going to have a tough time getting to breakeven. Of course, the good news with Sky Fi is that they cost XM far less than the others. Well, that's enough for now. I appreciate that you are assuming that SDARS is like every other subscription based business, but this really isn't the case at all for a huge number of reasons.