Dueling Fools: Sirius Bull Rebuttal

Sorry, Alyce, but it's easiest for me to do this point-counterpoint:

"Even after all this time, neither of these companies is profitable."

So what? Plenty of firms have gone from red to black, delivering huge returns in the process. Motley Fool Rule Breakers selection Akamai (Nasdaq: AKAM  ) , up more than 140% since joining the portfolio, comes to mind.

"As for the Howard hype machine.well, I don't even want to talk about Howard."

Fine, we don't have to. Sirius (Nasdaq: SIRI  ) CEO Mel Karmazin bought shares long before Stern went on the air in January, and has purchased plenty more since.

"And while both companies have agreements with many major automakers, the woes of some of the manufacturers, like Ford (NYSE: F  ) and DaimlerChrysler (NYSE: DCX  ) , both of which have partnered with Sirius to offer its radios in their vehicles, don't indicate much help for Sirius at the moment."

Any guesses as to how much General Motors (NYSE: GM  ) helps XM?

"The risks I've outlined here are reflected in the numbers."

And then some, Alyce. I'd agree that Sirius' valuation is utterly ludicrous -- if it were participating in a typical industry. But it isn't; it's a strong second-stringer in a duopoly. The market XM and Sirius have created will only keep expanding, and as it does, one firm will capture the lion's share of the spoils. Maybe it won't be Sirius. But if not, Karmazin -- you know, the guy who helped resuscitate CBS television -- has just blown $10.7 million. You'll forgive me if I give him more credit than that.

XM and Akamai are recommendations ofMotley Fool Rule Breakers, the newsletter service that tracks companies shaking things up. If you'd like to see what other innovators David Gardner has recommended, try out Rule Breakers free for 30 days.

There's more to this Duel! Check out the other three arguments, and then vote for a winner.

Fool contributor Tim Beyerscan't imagine a future without satellite radio in general, and Sirius in particular. Tim owns shares of Akamai. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.


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