Monday, April 24, 2006

Seen On The Message Boards

April 24, 2006

Internet message boards can be a wonderful thing, but all to often, they are clogged with senseless posts that are designed to scare people away. The most popular method is what we will term the "Drive By" post.

The "Drive By" post is a post with a bulleted point that while in and of itself may be factual, does not tell the whole story.

The Satellite Radio equities are a common battleground for "drive by" posts. Sirius Satellite Radio and rival XM Satellite Radio have a very unique circumstance that most other companies do not have. They operate in a virtual duopoly, and have customers that are very passionate about one service or the other. Sirius and XM are like the Yankees and Red Sox, or the Packers and the Vikings. It seems difficult for people to be fans of both, and their support of the chosen SDARS company can be very loyal.

What this means is a continuous banter on message boards between people that love SDARS, but are passionate about one company or the other. This article is not about the banter between those that are passionate about SDARS. This article is about a group of people that support neither company, but utilize the passions of the banter to do their work.

Today, we picked a post from the Sirius and XM Yahoo message boards to look at.

This first post is from the Sirius Yahoo message board, and can be considered a typical "drive by" post.

The post is #2455299

"SIRI is on track for BLOWOUT LOSSES....yep"

The second post is from the XM Yahoo message board, and is another typical "drive by" post.

The post #865200


Both of these posts are "short and sweet". Both make a point. Neither offers anything beyond the point they make. Investors need to understand that many issues that are brought up in these "drive by" posts are designed to paint a very negative broad brushed stroke at the company for an issue that is very specific. Investors need to understand a broad brushed range of issues that are made up of MANY specific components.

Those that think a little deeper will look at the loss for Sirius in Q1, and try to understand what it is that makes up the loss. How the current quarter impacts future quarters, and how the company is performing.

Those that look at XM's debt and bond status need to understand what the debt is, how it enables the company to function, how it impacts cash flow, and further need to understand how the bonds market works, and how ratings are determined.

The next time you see a "drive by" post, stop, look at it, take a few more steps than the poster did, and know that you will be better off in your investment decision (no matter what that decision is) because you took the time to do a bit more research than some "drive by" poster on the message boards.

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The link to this write up is http://tinyurl.com/egeu8

4/24/2006 09:10:00 PM

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