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XM Satellite Is 'Superior Investment' To Sirius

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#1 of 6 ONLINE   Ronald Epstein

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Posted April 07 2005 - 04:13 AM

XM Satellite Is 'Superior Investment' To Sirius 04.06.05, 9:42 AM ET Goldman Sachs initiated coverage of Sirius Satellite Radio (nasdaq: SIRI - news - people ) at "underperform" and initiated coverage of XM Satellite Radio Holdings (nasdaq: XMSR - news - people ) at "in-line." Goldman said that rising anticipation ahead of Howard Stern in 2006 may support sentiment for Sirius but has "relatively less attractive fundamentals, sizable dilution, a longer trek to breakeven, overly optimistic market expectations and an aggressive valuation should result in Sirius lagging our radio coverage group." The research firm acknowledged that Sirius "has vastly improved its business viability since its March 2003 recap but cash-flow breakeven timing remains elusive as content expenses ramp up materially in coming years." Sirius' new management "lends credibility to the potential ad stream, but again, timing is critical and likely more protracted than current expectations as advertisers wait for critical mass," Goldman said. The firm's discounted cash-flow and price/earnings-to-normalized growth analyses "imply a fair value of $4 per share" for Sirius. XM Satellite's lead in fundamentals, technology, and subscribers "positions it as the superior investment within the satellite radio subsector while better relative fundamental growth and quicker timing to cash-flow breakeven support XM's valuation." However continued operating losses with positive earnings before interest, taxes, depreciation and amortization "still two years away" and optimistic industry estimates "offset positive marketplace momentum and limit long-term gains," Goldman said. XM Satellite's recent price increase and OEM ramp-up of XM-equipped autos could boost positive newsflow in the first half of 2005 and increase the valuation gap between the company and Sirius, the firm said. Goldman sees XM Satellite's fair value at $34 per share.


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#2 of 6 OFFLINE   TheLongshot



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Posted April 07 2005 - 07:40 AM

At the same time, The Motley Fool has become a lot more positive in owning Sirius, mainly because of all the moves that they've made in the past year and increasing subscribership. The same issues that they were negative about before still stand (too many stocks outstanding, for example), but there are thoughts that over the long term, they may exceed XM eventually. Personally, that's fine with me. Let Sirius have the "popular" stuff. XM's bread and butter is the niche stuff, and should continue to be. If they decide the way to succeed is to out-Sirius Sirius, they'll lose me as a customer. Jason

#3 of 6 OFFLINE   SteveK


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Posted April 07 2005 - 09:21 AM

I agree, Jason. I don't want XM to become a "hits only" format with limited playlists that Sirius seems to prefer. Of course I want to hear familiar songs, but I also want to hear obscure songs I may never have heard before. Give me the 12-hour special broadcasts or the Songcycle on Bluesville where you might hear 30 or more versions of the same song in a row. We have enough cookiecutter radio stations; we certainly don't need another copy on satellite radio. Given that some FM stations are apparently broadening their playlists and reducing commercials, hopefully there is little possibility that XM will reduce its playlists and add commercials. Hopefully. Steve K.

#4 of 6 OFFLINE   Ralph B

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Posted April 25 2005 - 09:06 AM

thing is most people listening will prefer a pop playlist. its just fact. general public only has time for pop music and not obscure songs. small percentage that prfer obscure songs is very small. XM is popular over suirius for other reasons. dont have to prech to me as I prefer onscure music but thats not the reason XM is so big over sirius. BTW: my opinion is that XM is like AOL and is why it is so popular over sirius. personally I dont see the big gap between the 2 and I think XM just has the advantage as most "freinds" own XM already and because of that is what people go for when deciding. trust me....the general public see both sirius and XM and find it confusing to decide and go with the most popular....like AOL. trust me its truth!

#5 of 6 OFFLINE   TheLongshot



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Posted April 25 2005 - 09:53 AM

Well, the only way I'd compare XM to AOL is in terms of size in the industry. XM has the more adventurous playlist. Unlike what you think, XM isn't about "obscure music", but about stretch playlists. True, people aren't doing much in choosing except looking what's on the surface, but over time, they will decide what they want more of. I decided I was sick of the slim playlists on Sirius, so I left. I enjoy XM a lot more. Jason

#6 of 6 OFFLINE   MarkN


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Posted April 30 2005 - 11:04 AM

Excellent info Posted Image

My wife bought one for me (sort of) and I can't decide which to get.

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