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

To: i-node who wrote (2234)	2/17/2006 4:33:48 PM
From: DaveMG	Read Replies (2) \| Respond to of 3386

So by the end of 07 when subs will presumably have already reached 10 million churn actually starts to become a fairly serious issue. OF the anywhere between 2.5-4.5 million potential new subs, a full 1.8 million will be needed to maintain the 10 million over the year, which greatly reduces the growth rate and the rate at which cash can flow to the bottom line because of these acquisition costs, however they're labeled. And the greater the number of subs the bigger the problem.So they have to significantly reduce churn and acquisition costs..

To: i-node who wrote (2234)	2/17/2006 5:56:42 PM
From: pcstel	Read Replies (2) \| Respond to of 3386

The biggest problem these companies have, IMO, is keeping churn under control, once they get to making money. REAL churn, though -- paying subs leaving. And that is running 1.5% now. But again, the 1.5% is not a TRUE CHURN rate. It is HIGHER than that as real subscriber models go. The difference is. XM management has decided that a trial subscriber was not really a subscriber. Even though they counted them as a subscriber when calculating CPGA. It is simply a shell game. And the only one it hurts is the shareholder who isn't smart enough to understand the financial destruction that CHURN creates. So you can take you choice. Either CPGA is higher than they report. Or CHURN is higher than they report. Sitting here claiming that everything is fine helps no one, as the bean counters take note of the problems.

To: i-node who wrote (2234)	2/18/2006 7:52:42 PM
From: pcstel	Read Replies (1) \| Respond to of 3386

But a certain amount of the churn is people trading cars, etc., who don't re-up immediately or whatever. Here is the real weakspot in the SDARS model.. You have cusomter A. Customer A leases a new car on a 36 month lease. Customer A completes the lease and disconnects his service when returning the car. Now 3 years ago.. CPGA was running, lets say. $180 plus cost of capital, and the fixed expenses involved over the life of the subscriber. Let's say that his average ARPU was $11 a month. So over the 33 months. Subscriber A paid $363 dollars, plus his "promotional period". His costs were $180 plus cost of capital. Will call it $220. Plus the fixed costs associated with his subscription. Well, say just $3.50 a month, or $126 over the 3 year period. So we add it up you get $346 dollars. So over the three year peiod.. An SDARS compnay made a whopping $17, or .47 cents a month. Now, just when the CPGA is repaid, and the company is actually ready to make money off of the radio that was installed 3 years ago. The Subscriber returns the lease. Now Subscriber A leases another new car for 3 years, and gets another subscription to SDARS. You say. Fantastic. But, you get to start all over again.. A new CPGA and subsidy along with corresponding cost of capital to recover again. Just when you were getting ready to make money. You get to start all over again.