This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  )  closed at $3.51, down 2.8% on the week. The media darling's slide was trumped by Nasdaq's 0.7% uptick on the week.

There was more going on beyond the share-price gyrations, though. Apple (NASDAQ: AAPL  ) introduced CarPlay, making it easier for drivers to access its audio entertainment offerings. JANA Partners initiated a stake in Sirius XM. And on the streaming front, MKM Partners upgraded Pandora (NYSE: P  ) . 

Let's take a closer look.

Apple wants the driver's seat
Apple's next battlefield may be the dashboard. The consumer-tech giant introduced CarPlay on Monday, a platform that will make it easier for iPhone owners to use Siri -- and we're not talking about Sirius XM's ticker symbol -- to access information and audio entertainment from their car speakers. 

The ability to check voicemails, make calls, and use Apple Maps to navigate around may not be such a big deal to Sirius XM. Many automakers already offer similar, if not better, platforms. However, CarPlay also makes it easier to stream Internet radio and podcasts as well as dive into an iPhone's stored tracks. 

Sirius XM has been able to grow its self-pay subscriber base despite innovations in the area of in-car entertainment. It also bears pointing out that accessing streaming apps isn't as free as one might think unless they happen to have unlimited data plans. However, Apple's entrance into this market can't be ignored. It tends to attract attention, and that explains why Mercedes-Benz, Volvo, and Ferrari have already implemented CarPlay with most of the other car titans on board to roll CarPlay out in the future.

Hungry hungry institutions
JANA Partners didn't merely dip into Sirius XM recently. The hedge fund initiated a position in the satellite-radio monopoly with a whopping 50 million shares. JANA is buying at an interesting time, and it's likely banking on having Liberty Media (NASDAQ: LMCA  ) sweeten its offer to acquire the remaining nearly 49% stake it doesn't currently own.

Only non-Liberty Media shares will be voting on the deal, so JANA could be trying to stack the deck in its own favor. But it's not enough ammo to shoot the deal down. It's not that 50 million shares aren't a lot, but it's less than 1% of the shares outstanding. However, JANA's presence could signal that other activist hedge funds may be trying to get Liberty Media to pay more if it wants to own all of Sirius XM.

Streaming an upgrade
Pandora's had a pretty spectacular run, more than quadrupling since the beginning of last year.  

MKM Partners upgraded Pandora on Wednesday. It may not seem like much of a boost -- going from "sell" to "neutral" -- and its price target of $39 is essentially where the stock was at the time of the move. However, this is essentially another bear throwing in the towel on the market's leading provider of streaming audio that served up 1.38 billion hours of content during the short month of February alone.

6 more stock ideas pumping up the value
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Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On March 09, 2014, at 6:40 PM, VerySERIus wrote:

    Maybe Google will consider buying Sirius to add to their car line up....Maybe both could learn from the other....AD free subscription based vs. AD supported .

  • Report this Comment On March 09, 2014, at 10:58 PM, ara1029 wrote:

    I would take a Google stock swap in a heartbeat over Liberty. Any ratio will do.

  • Report this Comment On March 10, 2014, at 7:41 AM, zukerman wrote:

    What Very and ara1029 fail to understand is Malone wont take $3.68 for his shares and the price he expects would make it impossible for the buyer to gain his money back anytime soon. VerySERIus can't understand that too many have tried to sustain their business models with ads and to date nobody has done it consistently. Pandora has finally realized that they'll have to report quarterly on their metrics in order to smooth out the rough patches involved in ad only.

    Pandora will have to show that at the point of saturation that they can find revenue drivers that will sustain them into the future and this will be a daunting task when trying to attract advertisers.

    Royalty increases will also come into play for Pandora starting this new year and they stand little chance increasing the cost for music only. Look for all in this space to dilute once they try to obtain financing to grow from here. I don't see Google or Apple or anyone swallowing Sirius without it resulting in a discount to the share price once it's over, period. It all depends on who writes the article guessing why it's taking so long for a decision to be made concerning this low ball offer, my thinking is totally the opposite form what's been written so far.

    If you let the price drift lower and lower, institutional investors will buy in at these lower prices and vote yes just for the pop on the fractional increase on the second try.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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