It's quiet. Too quiet.
Shares of Sirius XM Radio (Nasdaq: SIRI) have spent the several weeks trading between $0.96 and $1.06 a share. That's a tight range for a usually volatile stock.
However, with 6.4 billion shares outstanding, the $0.10 range between August's high and low represents $640 million in value -- a healthy chunk of change.
What will it take for Sirius XM to finally move higher or lower? Let's explore the four events that can move the stock.
1. Howard Stern's decision
A decision on Stern's future with Sirius XM is coming soon. As satellite radio's most popular personality, investors and fans alike have been cautiously eyeing the end of his five-year contract come December.
Will he sign a new contract? Retire? Bolt elsewhere? The company expects Stern to go public with his decision before Sirius XM's third-quarter call. Even if that deadline lapses, there's no denying that January will be here soon.
The ideal shareholder scenario would be for Stern to resign for a lot less than the $500 million he collected in cash and stock for his original five-year deal. There's just no way that will happen. Inking Stern -- even if it's a smaller deal entailing fewer hours -- should have a favorable impact on the stock.
Stern's departure for terrestrial radio, cable television, or his own streaming service would hurt the stock. Sirius XM would be saving a ton of money, but diehard fans might cancel their subscriptions as they followed Stern elsewhere.
The third popular scenario would be Stern's retirement. The stock may dip on that news, but it might be for the best in the long run. As long as Stern fans don't have a different way to access the celebrity host, they may not necessarily cancel Sirius just because Stern isn't around.
Sirius, quite frankly, doesn't need Stern the way it used to. This situation is similar to what's going on with Mark Hurd at Hewlett-Packard. I've suggested that HP may come out ahead on Hurd's loss, because reports indicate that Hurd was in discussions for a three-year extension valued at $100 million. Despite Hurd's acumen, that's one hefty salary. While Hurd was undeniably a turnaround guru, HP now needs a cheaper visionary.
Similarly, Sirius needed Stern to catch up to XM. However, now that it's reached critical mass, spending that money on several other popular radio celebrities might make more sense.
2. Automakers on the move
Buoyant auto sales over the past year -- originally triggered by the "cash for clunkers" rebates -- have helped fuel Sirius XM's meteoric subscriber gains. Will the gravy train end if the assembly lines slow down?
Ford (NYSE: F) executive Mark Fields warned that the industry has flatlined, making it harder to post year-over-year gains during the second half of the year.
Let's be frank. If auto sales shift into reverse, Sirius XM will be in for some serious hurt. Sirius XM has been shedding subscribers at the retail level -- those buying aftermarket receivers -- for several quarters now. The satellite radio star's net gain of 1.1 million subscribers over the past year has come exclusively from factory-installed equipment in new cars. If new cars don't sell, yet the cancellations continue, investors will fear that growth has peaked.
Flipping that argument around, Sirius XM can gain some serious ground if auto sales surprise the market on the upside. Churn and trial conversion rates have been improving at Sirius XM over the past year, which could amplify its strength in the showroom.
3. International house of hotcakes
Why did Sirius XM introduce a streaming app for Apple (Nasdaq: AAPL) iPhone and iPod touch owners last year? The program cost way too much, charging the same rate as traditional subscriptions, even though it lacked Stern and some pro sports coverage.
Despite no public indications of web-subscriber success, Sirius XM has gone on to roll out streaming applications for Research In Motion (Nasdaq: RIMM) BlackBerry and Google (Nasdaq: GOOG) Android.
Is there a bigger plan brewing? Can premium Internet radio be Sirius XM's ticket to tackle markets outside of North America where its satellites don't reach?
We have to be realistic here. Sirius XM can't just flip a switch and make all of its content available globally. There are licensing concerns beyond its proprietary content. Programming may also have cultural hurdles to clear in foreign markets. However, it's not beyond the realm of possibility that the one company currently succeeding in premium radio -- Worldspace flopped abroad -- should lead the way in premium Internet radio.
For now, Wall Street is valuing Sirius XM based on its gradual penetration of the auto market. One analyst may have recently called the company the Amazon.com (Nasdaq: AMZN) of radio, but unlike the e-tailer, Sirius XM's flagship product is limited geographically.
An international offering -- particularly a well-received one at a realistic price point -- would leave the pros scrambling to account for Sirius's expanded potential.
Come on, news. Move this stock one way or the other. Playing tetherball around this $1 pole is getting boring.
Are there any other catalysts that can send Sirius XM lower or higher? Share your thoughts in the comment box below.
