Monday, July 10, 2006

What's up with Sirius (or Down)?! Perhaps GM-Nissan-Renault?

Last week, Sirius had better than expected subsriber additions beating analysts' rosiest projections, but the stock sold off in the following days. XMSR announced subsriber additions below analysts' most pessimistic numbers, and the stock has been trading flat. What gives?

Perhaps this pricing action has to do with the GM-Nissan-Renault talks, which gained momentum last week. Maybe the market is saying that a Joint Venture could put GM in a much stronger competitive position than Ford. Additionally, XMSR could potentially pick up extra points in market share if Nissan aligns with GM.

Despite short term competitive fears, any noticable benefits from an alliance would be far from immediate. Also, if global consolidation is in the cards for GM, Ford is probably not far behind.

Although SIRI has lots to look forward to in the second half of the year...the NFL, availability of live wearable units, launch of Howard Stern "Classic", cash flow break even, etc., it seems like the "negatively inclined" have held the upper hand this week.