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This Week in Sirius XM Radio

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Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  )  moved lower on the week, falling 1.3% to close at $3.12. The move was a sharp contrast to the Nasdaq's 0.5% gain. This matches Sirius XM's lowest weekly close since April of last year.

There was more going on beyond the share-price gyrations, though. Sirius XM expanded its initiative to get into secondhand vehicles. On the streaming front, Pandora (NYSE: P  ) received a timely analyst upgrade and AT&T (NYSE: T  ) announced compelling pricing for existing Mobile Share accounts to stay connected on the road with General Motors' (NYSE: GM  ) upcoming fleet of connected cars.

Let's take a closer look.

Second time's the charm
It's been a few years since Sirius XM brokered deals with the last remaining automakers, making sure that all new car showrooms have access to cars with factory-installed Sirius or XM receivers. The attention at that point turned to broadening its relationship with the even larger used car market. 

A good chunk of the resale market involves private transactions. Sirius XM doesn't have much of a way to access information on the new owner, but that's not the case through actual used car lots that are now motivated to push satellite radio subscriptions on cars with existing receivers. 

Sirius XM offers a piece of the action to dealers of resold vehicles, assuring the media giant of receiving the contact information of the new owner and some marketing muscle within the actual showroom.

Instead of striking yet another deal with a used car reseller, this week's deal is with Nowcom, a provider of the DealerCenter software that 4,500 dealerships use to track customers, leads, sales, inventory, financing, and other enterprise functions. The integration will make it easier for the dealerships using DealerCenter to enroll in the SiriusXM Pre-Owned Program and identify vehicles on their lot with existing receivers so that they can be demoed during test drives.

Turning up the volume on Pandora
MKM Partners kicked off the week by boosting its rating on Pandora. Analyst Rob Sanderson is upgrading shares of the leading streaming platform -- from "neutral" to "buy" -- but he's also lowering his 12-month price target from $39 to $32. 

If that sounds like a mixed message, keep in mind that Pandora's stock has fallen by 42% since peaking two months ago. Sanderson may be encouraged by Pandora's prospects, but this is mostly about the improved valuation.

Sanderson points out that iTunes Radio hasn't left much of a mark. He also pits Pandora to Sirius XM, charting usage trajectories to suggest that Pandora will overtake Sirius XM this year in terms of total listening hours consumed. Pandora has nearly three times as many active users as Sirius XM, but naturally you're going to tune in more if you're paying for an in-car service.  

Connected cars
GM plans to offer mobile hotspots as an add-on accessory in 30 different vehicle brands in the coming months, and the first one will be the 2015 Chevy Malibu that hits the market next month. AT&T will be the wireless provider of the new service.

AT&T subscribers can add the hotspot to existing Mobile Share data plans for just $10 a month with the hotspot sharing the data that's purchased every month. In-car hotspots aren't as cool as they may have sounded a few years ago. There are many cars that allow folks with smartphones to use Bluetooth to access apps through their dashboard entertainment systems. However, adding a hotspot to the car makes it less necessary to have data plans for all Wi-Fi devices or to fumble with a phone's mobile hotspot functionality to get everyone in a car connected. 

Will more in-car connectivity send drivers to Pandora, Spotify, iTunes Radio, and other streaming apps in lieu of Sirius XM subscriptions? That thankfully hasn't happened so far. Sirius XM closed out its latest quarter with a record 25.8 million subscribers. However, it's something that's worth monitoring.

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Read/Post Comments (1) | Recommend This Article (3)

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  • Report this Comment On May 18, 2014, at 6:20 AM, Hjbauto wrote:

    I dream of the day when "EXPERTS" stop comparing Sirius to other music delivery services It has been said over and over that Sirius is more than music. It is content. I listen to news, sports, comedy, howard, and music. I have iTunes, pandora, and Sirius. It's not a competition.

    I drink water, sports drinks, beer, and coffee. There is room for all services to exist. I have been listening to the death of Sirius for 10 years now 26 million and growing.

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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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