Sirius XM Radio (Nasdaq: SIRI) has some serious competition coming its way and it may need more than Howard Stern to save the day. Sirius' turn back to profitability after years of losses comes at the same time smartphones threaten its very existence.

Yesterday, CNBC highlighted Pandora's inroads into the mobile radio market, attracting more than 65 million registered listeners in the U.S. But Pandora isn't the only competitor Sirius should be worried about. All sorts of apps are popping up, from Slacker Radio, which offers a similar experience to Pandora; to iheart Radio, which provides radio stations from around the country; and even to Howard Stern, who has threatened to develop a premium app for smartphones. ESPN has also built a radio app offering football games, podcasts, and audio from popular television shows. Apps for smartphones are relatively easy to build, don't require a large capital investment, and can be used on a variety of devices.

Apple (Nasdaq: AAPL), Research In Motion (Nasdaq: RIMM), and Google's (Nasdaq: GOOG) Android dominate the smartphone market with 80.1% market share, concentrating apps in a relatively small group. comScore (Nasdaq: SCOR) reported that 53.4 million phones, 22.8% of mobile phones, in the U.S. were smartphones during the second quarter, up 11% from the first quarter and up 25.1% since January. So the market Sirius should fear most, smartphones, is growing by double digits every quarter. As new smartphone users become more aware of available applications and developers build more apps, I can't see how Sirius could maintain its subscriber base near 20 million.

Sirius has seen a financial turnaround, but its operations are highly leveraged, paying fixed contracts to talent and upkeep on infrastructure. So, Sirius' financial performance can go south as fast as it has improved. It also has more than $3 billion in long-term debt, a huge load if Sirius can't keep adding subscribers.

I'm not suggesting nearly 19 million subscribers will disappear overnight, but I am saying investors need to watch Sirius' subscriber totals closely in coming quarters. The company has done well keeping subscribers thus far, with a low 1.9% churn rate in the first half of 2010 and increasing revenue per subscriber, but earnings have yet to exceed $50 million in a quarter.

Analysts are expecting another year of weak profit with $0.01 earnings per share in 2011. With a $5 billion market cap, that's equivalent to a forward price/earnings multiple of more than 100. I think investors have gotten ahead of themselves on this one.

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Fool contributor Travis Hoium does not have a position in any company mentioned here. Google is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers choice. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.