Apple Fails Sirius XM Radio, Again

There was a lot of buzz last week about the XM SkyDock, Sirius XM Radio's (Nasdaq: SIRI  ) second attempt to turn Apple (Nasdaq: AAPL  ) iPhone and iPod touch owners into satellite-radio subscribers.

In the wake of the SkyDock's rollout yesterday, the device's shortcomings will probably prevent it from moving that needle. It's cool -- but not cool enough. For every attractive SkyDock feature, there's an equally compelling hype deflator.

Good: The XM SkyDock will charge your iPhone or iPod while in use. Forget the knocks claiming that listening to premium radio will suck your smartphone's battery dry. Your iPhone or iPod will pop out of the SkyDock even stronger.

Bad: The diagrams filed with the FCC looked too bulky to offer a portable solution, and now we know why. The device is limited to vehicle usage, since it feeds off cigarette lighters for power and plays through car radios. In short, it's more restrictive than the portable models already on the market.

Good: Unlike the Internet streaming app that came out two months ago, SkyDock is an actual receiver. Subscribers will have access to everything that satellite radio is beaming, including the play-by-play sports and Howard Stern broadcasts that aren't available through the App Store application that came out in June.

Bad: This is an XM device. Stern and the NFL are on Sirius. So instead of going with a Sirius receiver and paying $12.95 a month, Stern fans that get SkyDocked will need to sign up for the monthly $16.99 "Best of Sirius" package. If they want to make the service truly portable, they will then have to tack on an extra $2.99 a month to stream through their iPhones (but won't get Stern outside their cars). A portable receiver would have all that -- and Stern on the go -- for the base price of $12.95 a month.

Sure, it's cool that the iPhone can become a slick touchscreen controller for a car-based XM receiver. Unfortunately, this isn't a Palm (Nasdaq: PALM  ) Pre, capable of running several applications at a time. What happens if you want to run a GPS app? What happens when a call comes in?

I'm a satisfied iPhone owner. I subscribe to both Sirius and XM. Convergence -- at a premium -- is no slam dunk. Apple is a developer magnet, with thousands of apps shouting "pick me!" in the App Store. It's hard to get noticed in a crowd, especially when you're competing in a realm of fierce, no-cost rivals.

iPhone owners are paying AT&T (NYSE: T  ) $20 to $30 a month for unlimited data plans that give them access to free apps including Pandora, imeem, and Time Warner's (NYSE: TWX  ) AOL Music.

Wireless isn't the future for satellite radio. XM has offered limited programming at discounted prices for years through its XM Radio Mobile platform. It's available through Alltel, AT&T, and select models of Research In Motion's (Nasdaq: RIMM  ) BlackBerry.

"Sprint (NYSE: S - News  ) customers will be the first wireless customers to enjoy SIRIUS Satellite Radio programming via their mobile phones," reads a four-year-old Sirius press release.

In other words, mobile convergence isn't new. It hasn't moved the needle in the past, and it won't now, when the free ad-supported alternatives are everywhere.

There's nothing wrong with approaching the smartphone market in a cost-effective manner. Don't scoff at the potential for incremental subscriptions. However, throwing Apple and Sirius XM into a press-release blender won't result in a hype-worthy smoothie. 

More news than static:

Apple is a Motley Fool Stock Advisor recommendation. Sprint Nextel is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns shares of TiVo and is 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.


Read/Post Comments (31) | Recommend This Article (21)

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  • Report this Comment On August 27, 2009, at 12:50 PM, RAF22 wrote:

    The articles in today's Wall Street Journal accurately sum up the tremendous potential the new SkyDock relationship with Apple presents for Sirius XM. This is all part of a more proactive innovation and marketing strategy for Sirius XM that is sure to expand subscription revenues into the future - especially as Apple expands its penetration into spectacularly lucrative markets such as China. The stock performance of SIRI is reflecting this today, a shorts continue to scramble to cover - with losses from these positions mounting daily. It appears losses from excessively large short positions since March have totalled approximately $74,260,000.00 (based upon known short interest figures and trading levels from 3/19 to 8/26). Assuming the short interest still totals roughly 100 million shares, each 1 cent rise in the stock represents additional losses of $1,000,000.00. With the 3rd Qtr. release of earnings and guidance (in November) expected to reflect the benefits to revenues from resurgent auto production and demand, along with the new benefits from wireless platforms, expectations regarding news for SIRI should remain postive over the foreseeable future. Analyst recommendations are also turning stealthily positive (see comments in today's WSJ). The stock is now trading from dominant technical strength and risk/reward assessments strongly favor long positions near current levels. Substantially greater upside potential is indicated than downside exposure - technical projections indicate potential toward 1.90 to 1.00 around the time of the 3rd Qtr. release; toward 1.25 to 1.50 over the next six months to one year; and toward 4.00 over the next two years (representing a 50% retracement of the declines from December '05 to the lows in February '09).

  • Report this Comment On August 27, 2009, at 12:52 PM, RAF22 wrote:

    TYPO above: Potential is indicated toward .90 to 1.00 around the time of the November release of 3rd Qtr. earnings and guidance.

  • Report this Comment On August 27, 2009, at 12:55 PM, Bersani83 wrote:

    I just bought it! What a great addition! You should buy SIRI NOW!!!

  • Report this Comment On August 27, 2009, at 1:16 PM, BigVincent wrote:

    Rick I just love it how in an instant that people speak highly of a product you try to shoot it down like a rabid dog...

    Quoted By You:

    Bad: This is an XM device. Stern and the NFL are on Sirius. So instead of going with a Sirius receiver and paying $12.95 a month, Stern fans that get SkyDocked will need to sign up for the monthly $16.99 "Best of Sirius" package. If they want to make the service truly portable, they will then have to tack on an extra $2.99 a month to stream through their iPhones (but won't get Stern outside their cars). A portable receiver would have all that -- and Stern on the go -- for the base price of $12.95 a month.

    So are you mental? Don't you see the benefit from this. If Iphone listeners want howard there going to have to spend more than 12.99 a month not including the additional $2 royalty fee. This means for the best of sirius package a iphone user will have to spend $18.99.

    On average sirius only generates $10.60 per month, per subscriber after acquisition cost. this is basically a huge bump to reduce this acquisition cost.

    If sirius was to acquire 100% of Iphone users then yes sirius could go all out and be more user fee friendly. Fact is this won't even penetrate 10% of Iphone users. it's about supply and demand dude because the demand will be limited to a select few it's going to cost more to own it. get it through your thick skull this is a good thing, not a bad.

  • Report this Comment On August 27, 2009, at 1:20 PM, brian6545 wrote:

    Wonder if this device will play stored iPod songs. What you don't want is two devices..one that plays Sirius and one needed to play your iTunes. Surely they thought that through.

  • Report this Comment On August 27, 2009, at 1:42 PM, Joelshann wrote:

    RAF22--would you match Rick's disclosure policy, and let us all know what you holdings (long, short, or mutual fund) in SIRI are?

  • Report this Comment On August 27, 2009, at 2:11 PM, EgisCoder wrote:

    Stop writing articles. You do not understand basic concepts. This is not a portable device. It is for your car. Sirius is getting back it's cool factor with this. Mark my words. This is aimed at NEW subscribers. Putting people towards one platform is what they want. They cannot be two seperate companies forever. Right now, XM has all programming available to it, so why develop a SIRI dock that does not have baseball? If that happened you idiots would be writing about the shortcomings of that dock.

    Give it a rest. Do a little more research. Put out ONE good article than three half-assed poorly researched "articles".

  • Report this Comment On August 27, 2009, at 2:13 PM, EgisCoder wrote:

    Brian,

    Yes it does. You can verify this in the FCC documents for the device. If you have trouble finding them, there are copies floating around on SatWaves.com as well as images of this new device and the other radios that were announced yesterday

  • Report this Comment On August 27, 2009, at 2:17 PM, JPS007 wrote:

    This article was writting by an ingoramous! The SkyDock is an incar product and was never intended to be used outside of the car. There was never any pitch by Sirius XM that this was a portable product (except that its easy to move from car to car).

    It would be like me saying that a my car radio is a piee of junk because it only works in my car, and not in my house.

    I laugh at these articles from MF.

  • Report this Comment On August 27, 2009, at 2:18 PM, JRSmithman wrote:

    Rick you spelled Apple wrong shouldnt it be spelled as FOOLS as in the tital should read "Fools fails Sirius Again"

    we will forgive the typo it happends to everyone.

  • Report this Comment On August 27, 2009, at 2:19 PM, JRSmithman wrote:

    lol this is at .70 and Fools still give this 2 stars what a joke

  • Report this Comment On August 27, 2009, at 2:25 PM, Fool wrote:

    Sure, I'd love a telephone that stored music, downloaded files from the internet, picked up satellite and terrestrial radio, let me purchase and keep a song just played on the satellite, played Vinyl LPs, and extended my life span. This dock isn't it, and isn't intended to be. What this dock IS, is the first step in that direction. (OK, so maybe SIRIUS isn't working on extending my life span. Yet.)

  • Report this Comment On August 27, 2009, at 2:36 PM, crankly09 wrote:

    Another idiotic FOOL article.

    I've roasted you moronic "authors" about your negative SIRI writing enough, so I'm giving up for good now. I'll just sit back with my 100k + shares @.36 pps and laugh at your babbling, non-sensical "articles" from my private yacht in the Caribbean in 3 years.

    Do you even need a GED or high school diploma to write to be a FOOL "author"?? If not, I have a Labrador with nothing but time on his hands and I'm sure I could teach him to type, then put him to work on your staff....

    GLTA SIRI LONGS!

    -Crankly

  • Report this Comment On August 27, 2009, at 2:52 PM, jmstamis wrote:

    Sirius just needs to get is #$%@ together and create both sirius channels and xm channels on one service, on one device. It has been a year and a month now since the merger.

  • Report this Comment On August 27, 2009, at 3:33 PM, Fredlee009 wrote:

    good stuff egis. You pretty much summed it up. This guy doesnt understand the product, the market, the company, nothing, and he writes about it. Every one good idea he has he has 10 bad ones. This company is just starting to get going, like a new baby. Just sit back Rick and enjoy the show.

  • Report this Comment On August 27, 2009, at 3:33 PM, liride36 wrote:

    the fact about home use is an easy fix there is an adapter for home use it plugs in wall and is a cigarett lighter adpater. can get one at any truck stop or walmart even radio shack. hope this helps.

  • Report this Comment On August 27, 2009, at 4:51 PM, wuff3t wrote:

    Guys,

    Jeez, it's boring reading all the TMF-bashing comments. The fact is TMF at least present a case before they bash SIRI; it would be great to hear someone present a numbers-based analysis of why they SIRI is a good investment...

    Can you...?

  • Report this Comment On August 27, 2009, at 5:01 PM, jamf92 wrote:

    This is AWESOME! I drive an older car that does not have a Sirius receiver (wife has the new car with Sirius) and I HATE listening to Model T of music, AM/FM stereo. Sounds like I can now start getting my Sirius fix on the long drive home through my iPhone. Yes, it would be nice if I could walk around receiving Sirius like a mobile device but to get it in my car and at the office is a BIG benfit to me. All is can say is SWEEEEEEEEEETNESSSSSSSS!

  • Report this Comment On August 27, 2009, at 5:04 PM, jamf92 wrote:

    Sirius a good investment? It can easily be debated both ways as of today but I took a risk and bought $10K worth back when it was at 9 cents a share. Trading around .65 - .70 today, yes I would say that was a good investment :)

  • Report this Comment On August 27, 2009, at 5:09 PM, TxTom wrote:

    People dissed me for buying a bunch of "C". Today it hit the "400% gain" mark. I got the same flack because I bought SIRI at $.14, but it keeps going up too. I'll keep it until it passes the $1 mark this year, and then will consider the $2+ potential in 2010.

    Not to get off the subject too much, but HBAN is the next bank poised to go up substantially. Think about it.

    Will subscribe to Sirius/XM when my trial offer runs out next month. It's the least I can do after returns on the stock. SIRI is a winner...

    Happy trading!!!!

  • Report this Comment On August 27, 2009, at 5:51 PM, ST0CKTRADER wrote:

    by the time motley fool gives siri a buy recommendation this will have already ran up another 500 percent. if you listen to them you'll be late to the party.

  • Report this Comment On August 27, 2009, at 6:02 PM, gobabygo1 wrote:

    I don;t understand! The company appears to be creating ways to explode. Action creates action! When you look Siri you have to be pleased with thier effort and I believe the stock will go to 80 plus cents with any type of positive news

  • Report this Comment On August 27, 2009, at 6:48 PM, Foolsdad wrote:

    My fool kids, get a piece of rope & hang yourself! Let me enjoy siri's profit.

    You don't understand the use of docket, go & cut the grass at backyard.

  • Report this Comment On August 27, 2009, at 10:07 PM, JWILLI44 wrote:

    This guy goes out the way to find negatives with the dock. First, it's too bulky according to the diagram? It is a car Dock fool!!! What car dock is made to be portable??!!kEY WORD IS "DOCK" It plugs into a cigarette lighter...lol, if it was smaller then you would buy a portable cigarette lighter to carry it around? wtf??! Maybe one day they can make a antenna headphone...of course then the negative will be is it kills batteries...

    Second, the "bad" about it being on XM and not Sirius. Now you have to pay for Best of Sirius to get Howard and NFL...Ok, that is what all XM subs already do IF They want H STERN. There are about at least 8 million people with xm and don't want STERN or NFL! All of a sudden every satelite sub only wants Howard!? He is on vacation more than he works!!!Those that love Stern will pay the extra $2.99 like XM subs do already. If the dock was made for Sirius then the negative would be...now all the baseball fans can't get baseball with the sky dock. In my opinion having it for XM is the best soloution. When it is XM, everything is available from baseball, howard Stern, NFL, NBA, everything...You can't get Baseball on Sirius yet..even with best of XM! how many subs get satelite for baseball, Oprah, Opie and Anthony, etc?

    True, a portable satelite player is a better device for satelite than the iphone is, due to its recording abilities, and true portablility...My xmp3 is truly portable for about 4-5 hours using live xm..would ipod touch users like that? maybe not.....but really...No one will have an ipod/iphone and a seperate portable stiletto or xmp3, that would be silly. Last ,,,as far as "what if a call comes in"? I agree, but the same problem with Pandora, etc...What these bashers don't tell you is that there are 3 times as many ipod touch users than iphone users!! So, phone calls coming in is not a problem for ipod touch users, Pandora is not an option for ipod touch in car...This is a slam dunk for the Ipod touch...Iphone users will be a tough sell because they already pay way too much for data and text....I personally don't think your phone should be a radio or music player in a car....Ipod touch users should love this...! This will also drive sales of Ipod touch devices...now you are getting an ipod touch with all the cool features...and when IN YOUR CAR, and when you have WI -FI you get XM...Buy an Ipod touch and get the ability to be entertained within minutes without having to transfer a bunch of songs you heard already...If they can have an install where the "geek squad" does everything for new ipod touch and sky dock buyers....it will be a GRAND SLAM!

  • Report this Comment On August 27, 2009, at 10:16 PM, JWILLI44 wrote:

    One last thing...The Blackberry and Sprint options were a joke!!and the author should know this...Blackberry offerded 20 XM chanels for $7.99 a month...You didnt get to choose the 20 channels..just a bunch of channels they thought people wanted..Something similar was offerd with Sprint. They were not "satelite" capable and the plans were ill-conceived years ago. They shouldnt even offer it anymore. This skydock is not "wireless" as in cell phone service...It is full fledge satelite for your ipod touch/iphone...What is being missed is this is the first time Satelite is being offered on the most popular Mp3 player..the ipod touch....I don't think it will ever draw many subs from the cell phone market...cell phones have too many other uses to pay for radio that will be interupted every 2 minutes...

  • Report this Comment On August 28, 2009, at 9:31 AM, den0220 wrote:

    can these retards do no right?

  • Report this Comment On August 28, 2009, at 3:22 PM, JWILLI44 wrote:

    All these writers talk about how Howard Stern is the most "popular" attraction for satelite radio. Ok, I will grant you that he is the biggest single attraction. That being the case, if SIRIUS XM want to increase revenue per unit, what would they rather offer? Sirius where you get Howard, but no baseball for $12.95 or XM where you get baseball and Howard Stern for about $16.95 or so. The Math is obvious, Howard gets a huge pay check, if his followers want to listen they will pay an extra $4 bucks a month for him and the NFL basically, not a big deal! Comparing both options XM with best of SIRIUS for $16.95 with Howard Stern, all sports including baseball, oprah, opie and Anthony, etc...or just get Sirius with no baseball possible even with best of xm..no nba, oprah radio, opie and Anthony and save $4.00? The real home run will be if they could offer A la carte for the ipod touch/iphone...That would really drive subscriptions. I think they are focusing more on getting the most revenue per sub though..To say it is "bad" for being XM is really short sighted on your part. XM since it has baseball rights is the better option for SIRIUS XM subscribers...

  • Report this Comment On August 28, 2009, at 7:39 PM, killab73 wrote:

    just another sh!tty article written for a crappy blog. noone takes these !diots seriously. these morons look like @$$holes with the crap they post.

  • Report this Comment On August 31, 2009, at 2:44 PM, JPDemers wrote:

    So what, exactly, does the iPhone do here, other than serve as an interface? This sounds like nothing more than a Sirius XM radio playing dress-up. You can also design a VCR with a slot for an iPhone on top; the "cool factor" doesn't cover up the fact that it's a lame idea.

  • Report this Comment On September 01, 2009, at 1:23 PM, BullishBroker74 wrote:

    Brandon Matthews

    On any given day, there are dozens of professional stock “bashers” trolling the stock message boards and posting erroneous information on Sirius XM Radio (SIRI). Perhaps that is where Jim Cramer, CNBC and the multitude of biased financial media get their information, so with that in mind I set out to dispel some of the myths surrounding the company, by explaining the reality of things like revenue, debt and EBITDA growth.

    Our first myth involves Sirius XM debt and the battle cry of the ignorant that it is somehow excessive. As the chart I’ve embed below indicates, Sirius XM debt stands at $3.89 billion. Compare that figure to Viacom (VIA.B) at $7.37 billon, Comcast (CMCSA) at $33.04 billion, Dish Network (DISH) at $5.13 billion, Time Warner Cable (TWC) at $22.93 billion, British Sky Broadcasting (BSY) at $4.46 billion or even Direct TV (DTV) at $5.79 billion and clearly Sirius XM Radio debt is anything but excessive. [click to enlarge]

    How many times have we heard the argument that Sirius XM Radio has too many shares outstanding? First of all, there is no such thing. A company’s value is not measured in outstanding shares but rather its market cap. Once a company achieves positive free cash flow and sufficient earnings, shares can be repurchased, and Sirius XM Radio has many years ahead of it in which to implement such a plan. There are some who question the potential market cap of Sirius XM Radio. The problem is that Sirius XM Radio suffers from an identity crisis. One analyst may value the company based on media stocks, while another labels the equity consumer discretionary, while still others like myself look at the company as a subscription service like cable operators.

    Sirius XM Radio has a current market cap of $2.69 billion dollars, and commanded a combined market cap of as much as 6 billion dollars just one year ago. Compare that figure to Viacom with a $15.27 billion market cap, Comcast with $45.08 billion and Direct TV with $24.37 billion, and clearly there remains plenty of upside potential to SIRI shares.

    Based on current valuations, Sirius XM is being lumped with companies such as Clear Channel (CCO) which commands a market cap of $2.5 billion as it faces the potential of bankruptcy in the not too distant future, and which derives almost all of its revenue from advertising. It is for this reason that Sirius XM Radio shares remain undervalued and explains why some retain their negative outlook on the stock. Sirius XM Radio would be fairly valued today at $1.30 – $1.50 per share based on its debt management and increased year end EBITDA projections.

    What about Sirius XM’s future potential? Of all the stocks mentioned above, I would like to direct your attention to revenue growth. Sirius XM’s revenue growth stands at 108%, dwarfing all of the competition, and analysts expect revenue to continue to grow over 60% in 2010. As my friend “Muscle13″ points out, it’s all about EBITDA growth. It is also the one metric that critics can point to in justification of their negative bias. Even with increased EBITDA guidance, Sirius XM still falls short of having earned a higher market cap than the 6 billion it should currently be valued at. As the chart shows, the market cap values of the other company’s mentioned far surpass that of Sirius XM based on EBITDA. That is changing to the positive however, as Standard & Poors research points out in their research report:

    (Sirius XM) Management recently issued post-merger financial targets for the next five years, with 2009 subscriber growth of 20.6 million reaching 28.4 million by 2013, revenue of $2.7 billion to $4.1 billion, adjusted EBITDA of over $300 million to $1.5 billion, and free cash flow of breakeven to $1.4 billion.

    Sirius XM management had provided 5 year guidance which offers the potential of Sirius XM shares rising to as much as $7.50 in the next 5 years, as long as management can deliver. Those projections put EBITDA at 5 times its current level. Simple math tells us that $1.50 x 5 = $7.50. That’s not a bad 5 year potential return on a .65 – .70 investment and certainly a justifiable long term price target that leaves out any outrageous multiples that a sector monopoly might warrant in the future.

    There is one more myth that is beginning to make its way around the web. That is a claim that Sirius XM will soon receive a delisting notice. That is false. They will soon receive a letter of non-compliance and have at least a full year to regain compliance.

    Position: Long SIRI

  • Report this Comment On September 03, 2009, at 4:11 PM, wordcarr wrote:

    WOW What a post by BS Broker.impressive lenght.BS are you aware that as I write these words that XM is being sued for royality fees in Canada?Thing about it is that the fees are every year, and are based on the number of people in your coverage,not the actual ten or so people that listen to xm.Broadcast companies have pay or quit using the Music. I quess that because you say they are a sub service BMI and ASCAP will apoligize to you and let xm off the hook.

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