5/24/2006

As XM burns, Sirius dragged lower in sympathy


Well the satellite radio sector as a whole sure has had a rough time of it so far in 2006. It has been a rough time for the stock prices of both XMSR and SIRI as of late with both companies hitting 52 week lows as of yesterday's close.

On Wednesday XM CEO Hugh Panero revised subscriber guidance for XM indicating that the company is expecting to close out 2006 with 8.5 million subscribers as opposed to the previously forcasted 9 million subs. XM states that they have regained retial market share since the first of the year, but the numbers put forth by the NPD group seem to tell a different story as Sirius achieved 54% retail market share in April'06 compared to 38% retail market share in April '05. For 2006 Year To Date Sirius is outpacing XM with 58% of the retail market as opposed to XM's 42%.

XM is stating that the sat. radio industry as a whole is "soft", however SIRI fired back later this afternoon confirming their own guidance, expecting to close out 2006 with 6.2 million subs which would indicate a net gain of over 2.8 million paying customers during the year.

In my opinion XMSR has had nothing but bad news so far this year, they have been sued by record labels and have a couple class action lawsuits pending against them by their own shareholders for securities fraud and misrepresentation and today they lower their expected totals for the year. XM closed the day down over 10% and SIRI was dragged down 5% as well in sympathy.

At this point I would think that SIRI is an attractive play for new investors as well as those who may have been in SIRI for a while and are looking to add some cheap shares. In my opinion there may be continued weakness in XMSR, but I think SRI may have found it's bottom and be headed for a nice bounce where 20% or more can be made in a short timeframe from these levels.

The Opie and Anthony Virus that the tandem claim is spreading across America seems to be spreading across XM as a whole, and not in a good way. To add insult to injury to the O&A, XM and CBS triumvirate it was announced after hours that CBS has settled its lawsuit that was filed against Howard Stern some months ago regarding his move to Sirius which CBS claimed Stern "fraudulently concealed" his interest in Sirius. Once CBS added O&A and to their east coast lineup it appeared as if it would only be a matter of time before the lawsuit was settled. This is just one more added bonus to Sirius at this point.

I will disclose that I am a long time Stern fan as well as a Sirius stockholder. Also I will freely admit that the Stern staff has been on a roll and the shows on Sirius have been a laugh riot, leaving anything that is done on regular radio in the dust...

Howard Stern..... "We Speak Your Name"

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