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Sirius XM: 5 Years Later

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Five years may not seem like much when compared to the nearly 25 years that Bob Edwards served as a morning-show host on National Public Radio. But a lot has changed for Sirius XM Radio (Nasdaq: SIRI  ) since he arrived.

Edwards was a pioneer. He migrated from terrestrial radio before bigger media icons Howard Stern, Oprah Winfrey, and Martha Stewart inked their big satellite-radio deals. Now Sirius is celebrating the fifth anniversary of Bob Edwards' arrival on satellite radio this month. The distinguished radio newsman joined XM shortly after it hit the 2-million-member milestone. Sirius was considerably smaller at the time. In fact, Sirius and XM together accounted for just 3 million subscribers. 

Times have certainly changed. Even though this has been a rough year for subscriber acquisition and retention rates, Sirius XM still manages to claim 18.4 million subscribers. It's hard to think of any other premium subscriber-based industry that has grown sixfold over the past five years. Comcast (Nasdaq: CMCSA  ) and DirecTV (Nasdaq: DTV  ) have broader audiences, but they definitely weren't as small as Sirius XM was in 2004.

Today's subscribers are also paying more for access, and that's important when you consider the scalability of the satellite-radio model and Sirius XM's need to beef up margins to command the market's respect.

After all, margins and profitability are crucial for any business. Five years ago, Netflix (Nasdaq: NFLX  ) had 2.2 million subscribers. Its user base has grown quickly, but it's a far cry from Sirius XM's audience. One of the reasons Netflix is a market darling while Sirius XM trades at a fraction of its 2004 price is that a lack of cash flow has forced Sirius XM into printing new shares to keep creditors away.

Now that Sirius XM has gotten its financial act in order, its hope is that the stock gains that failed to materialize during its subscriber-growth heyday can show up and help create a positive-cash-flow story. It would be ironic to see Sirius XM's stock rise as its user base flattens out or possibly even declines, but that's what the market needs to see before it buys into the satellite-radio model.

Enjoy the birthday cake, Edwards. Let's see how rich dessert tastes in five more years.

Other items you should check out on the radio dial:

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns shares of Netflix and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2009, at 1:43 PM, mikecart1 wrote:

    1st!

    Another Rick/Siri article. Who would of thought? HEHE

  • Report this Comment On October 13, 2009, at 1:54 PM, dcsilver wrote:

    Flat subscriber growth and incrweased revnue per listener will push this stock to $1.

    Negative subscruber growth and hearing Mel tell everyone that Sirius is positive cash flow story will drive the stock to $.40

  • Report this Comment On October 13, 2009, at 2:39 PM, rhamp wrote:

    Fair article. in theory the stock should go up because of the increase in revenue, let's hope it actually does. what should I go is they turn a profit, take the day off?

  • Report this Comment On October 13, 2009, at 4:03 PM, rickmt57 wrote:

    Maybe I'm mistaken but wasnt it just last week these idiots had an article out that said Sirius was one af the top 5 companies to go bankrupt? Then today they put out this article and state the following: Now that Sirius XM has gotten its financial act in order, its hope is that the stock gains that failed to materialize during its subscriber-growth heyday can show up and help create a positive-cash-flow story.

    So last week bankrupt this week financial act in order. Damm pass some of that &*^*( your smoken....lol

  • Report this Comment On October 13, 2009, at 4:05 PM, rickmt57 wrote:

    Maybe Im mistaken but want it just last week these idiots posted an article about how Sirius was one of the top five comopanies to go bankrupt? Then today they post this story and state the following: Now that Sirius XM has gotten its financial act in order, its hope is that the stock gains that failed to materialize during its subscriber-growth heyday can show up and help create a positive-cash-flow story.

    You guys need to stop smokin that stuff or pass some this wy so I can relate to what your saying...

  • Report this Comment On October 13, 2009, at 4:33 PM, Joelshann wrote:

    RickMT57 = Registered Fool since 9/11/2009, Zero posts, Zero recs, Zero profile, Zero CAPS.

  • Report this Comment On October 13, 2009, at 4:41 PM, dedmunds wrote:

    Good article Rick, SIRI will become a #1 company again. All who have held on will be rewarded. I see you have finaly realized SIRI has got it's financal act together and next is for the shares to RISE!!!!

  • Report this Comment On October 13, 2009, at 5:57 PM, WoodyDog1400 wrote:

    Fair article. Key is PROFIT, not subscriber growth. If SIRI can turn a profit now (with declining growth) just think what it can do with an improved economy and sub increase...

    What business right now is gaining subscribers?(besides internet porn :)

  • Report this Comment On October 13, 2009, at 6:56 PM, SIRIDoom wrote:

    Seeking Alpha is a censorship joke. They get paid for advertising stocks. They censor stock negative comments. They need to be removed from Yahoo,,,

  • Report this Comment On October 13, 2009, at 7:05 PM, SIRIDoom wrote:

    SIRI is NOT going to hit a dollar before the rev-split. If they even wanted the sp to go up you would see/hear more from the compnany. They want to reduce the number of shares so they will rev-split.

    SIRI will go down when the rev-split ratio is anounced. They need a 25 for 1 split and that will drop SIRI to 20 - 38 cents a share. This stock is a true dog...

  • Report this Comment On October 13, 2009, at 8:18 PM, gettingit wrote:

    Rick, good article. I have two questions that maybe you can help me answer.

    1. Do you know hat kind of deal SIRI struck with Ford and others that includes a one year SIRI subscription with the purchase of a new car and is there a deal that they struck for a lifetime subscription with any car maker. This type of approach, providing the deal makes sense,seems to be the way to go to avoid churn and retain subscribers. I suspect this is new and so I have t think that if one were to add up the companies in which this type of arrangement is made,

    and we understood the deal terms, determining revnues should be easy.

    2. Do you think it would make strategic sense for Apple to but SIRI? It's cheap, they could make their product "live" and they would gain many new customers.

  • Report this Comment On October 13, 2009, at 10:25 PM, SIRIDoom wrote:

    Seeking Alpha is a censorship joke.

  • Report this Comment On October 14, 2009, at 4:11 AM, SIRIDoom wrote:

    The following has bee censored 5 times from Seeking Alpha:

    ----Sell

    SIRI is going to 38 cents when the rev-split ratio is announced.

    Censoring negative opinions on stocks is abusive media manipulation and a violation of Free Speech. I suggest everyone refuse to use such web sites. Seeking Alpha should be avoided

  • Report this Comment On October 14, 2009, at 10:08 AM, M21CB wrote:

    SiRi doom your a joke, tryin to get people to sell because you shorted the stock, trying to get people to stay away from seeking alpha because you shorted the stock, on this post board everyday bashing siri instead of moving on because you can't because you shorted the stock and now your broke haha! Lol! I feel so sorry for you buddy, better luck next time. "Long Siri"

  • Report this Comment On October 14, 2009, at 10:34 AM, dedmunds wrote:

    Everybody must go to Seeking Alpha or SatWaves.com for true and unbios information on SIRI stock. It's the only true information on this stock. The na sayers and bashers of SIRI stock only put down these sites trying to keep the shares low.

  • Report this Comment On October 14, 2009, at 11:20 AM, SIRIDoom wrote:

    LOL, SIRI is a dog with fleas.

    Why short? It is going to rev-split and devalue in the rundown. You can't short volitility like that unless your name is Mel KarmaCrook.

    Say that on Seeking Alpha and your shore to get censored.

  • Report this Comment On October 14, 2009, at 11:31 AM, dedmunds wrote:

    SIRIDoom read M21CB again GET IT? HA HA

  • Report this Comment On October 14, 2009, at 12:22 PM, insert79 wrote:

    I think siri is a great company with promising results for the long run. The comp is scarce, and wait until they start going global...The company is run by one of the top CEO's who know to run a profitiable company. I bought 3000 shares at .34 cents a share, and the only thing i am going to do is close my eyes and cash them out in 25 years...Then i will have to fiqure out what color ferrari to buy...We are investors and taking risk is half the fun....But being knowledgeable about what your investing in is smart/ but not everybody is going to agree...

  • Report this Comment On October 14, 2009, at 7:17 PM, TheWongg wrote:

    Satwaves and seeking alpha are pure SIRI propaganda sites. SIRI can do no wrong there, and it is full of stock pumpers. Just like Motley Fool thinks SIRI can do no right.

    People put down the stock for a good reason, not just because they want the stock to fall. Although some people take it to the extreme *cough* Siridoom *cough*, they have just as much say as the propaganda group over at those sites.

    I, however, am seeking a more realistic site on SIRI. One that shows both sides equally. I have yet to find a good one.

    My personal belief is not to invest into SIRI until they can at least lock in their content for another 5 years. Stern, for example, is too smart to not start his own internet show for a fee, and make it available to all computers, TV's and cell phones. SIRI is unable to do it correctly, and the failure of the iPhone app is proof. They are unwilling or unable to get this task done in reasonable time.

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