A Fool Looks Back

The spirit of satellite radio
It finally happened: Sirius (Nasdaq: SIRI  ) popped the question. If things go as planned, the two satellite radio upstarts will merge, with XM Satellite Radio (Nasdaq: XMSR  ) receiving 4.6 shares of Sirius.

Tim Beyers and I were all over the story.

Is there anything else that needs to be said here? We all know that there will be huge savings if the deal goes through. We also know that the FCC is going to make its decision very carefully.

So let me offer up something new to provide a little weekend chatter. Why is XM getting 4.6 million shares when Sirius could be getting 0.22 shares instead? I know, Sirius is the one wearing the pants in this relationship. However, the new company will have roughly 3 billion shares outstanding, using Sirius stock as legal tender.

Even if things go off without a hitch, you still have an industry that is spending a ton of money to attract fewer new subscribers in 2006 than it did in 2005. The next wave of subscribers will be trickier to talk into satellite radio than the first 14 million. Cost savings will be realized, but it will take several years before the market considers this to be a $30 billion company. In other words, the shares will be trading in the single digits for even longer now that the fast-growing Sirius is weighed down by the decelerating growth at XM.

Share prices shouldn't matter. Market cap is market cap. However, there are some investors -- and institutional investors -- who don't like trading in and out of stocks that are going for $3-ish.

An Apple for Cisco
The iPhone will finally be the iPhone. Apple (Nasdaq: AAPL  ) came to terms with Cisco (Nasdaq: CSCO  ) over the right to use the name -- trademarked by Cisco -- for Apple's highly anticipated wireless device.

Apple's been working that olive-branch magic a lot lately. The company made nice with The Beatles earlier this month in order to justify its push into selling music.

Keep it coming, Apple. Our radio producer, Mac Greer, must be waiting for Apple to compensate him handsomely for naming its desktops Macs.

Until next week, I remain,

Rick Munarriz

XM Satellite Radio is a former recommendation in the Rule Breakers growth-stock research service.

Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.


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