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

To: Guy Gadois who wrote (2165)	2/16/2006 12:05:52 PM
From: sixty2nds	Read Replies (1) \| Respond to of 3386

10:14 XMSR XM Satellite: potential buying opportunity on pullback this morning- Oppenheimer (24.50 -0.75) -Update- Oppenheimer expects XMSR to maintain its lead in the industry as it is expected to double its 2004 subscriber count by 2006 and more than triple it by 2008 to 16 mln. The firm says although XMSR's stock appears relatively expensive by most conventional metrics, adjusting the co's enterprise value to rev multiple by its 2004-2008E rev compound annual growth rate reveals a PEG-type ratio below both cable and satellite TV operators' ratio, and 50% below that of Sirius Satellite Radio (SIRI). The firm notes this morning, XMSR reported mixed 4Q05 results and disclosed that one of its board directors had resigned. They expect the stock to pull back significantly this morning in response to this news. They view the pullback as a buying opportunity because they expect XMSR will appreciate in 2006 due to stronger retail sales from the roll-out of their MP3 player and the realization that the Delphia bankruptcy will not impact product availability.

To: Guy Gadois who wrote (2165)	2/16/2006 12:14:11 PM
From: i-node	Read Replies (1) \| Respond to of 3386

Somewhere down the road XMSR and SIRI will merge. This will probably speed up this process. Why would they "merge"? Assuming, arguendo, that they could get regulatory approval (highly unlikely), why would they do it? Mergers and acquisitions, to be of value, have to produce some kind of synergistic effect. What would that be here? You have two companies with extremely expensive, incompatible satellite infrastructure and receivers, competing, precisely as the FCC planned. What, exactly, is the motivation for a merger? A few years from now both will be generating so much cash they don't know what to do with it all, and this is fairly obvious to everyone looking at the sector. Why would there be a merger? And assuming there were going to be a merger, what is going to "Speed up the process"? This individual claims to have resigned over differences in the company's direction. He says he didn't want to spend the cash to preserve XM's market leadership, preferring instead to get to cash flow breakeven earlier. The rest of the board said, "We want to take a longer view, sacrifice CFBE at the expense of making sure we maintain our market leadership position." This appears to be a legitimate disagreement which warranted the guy's resignation. My view is that the board got it right -- they could have saved $100 million in Q4 and elected not to compete against Sirius/Stern, but they decided instead to work hard during that period. It paid off -- while Stern took away some market share, it was temporary and XM will return to something near its previous leadership position.