Wednesday, October 25, 2006
The SatRad Stock Trader: What's Going On?
What’s going on with SIRI and XMSR stock prices these days? That’s the question that I have been fielding most often these days. The market is at annual highs, auto stocks are up huge, terrestrial radio stocks are soaring, but satrad is trading near annual lows. What’s going on?
I made a few calls, and this is what I am hearing:
1, The play for the past several quarters has been to short both stocks into earnings. This strategy has worked well. Although SIRI’s earnings have beat, it’s been guilt by association in a sector with only 2 competiors, as XMSR’s have been worse than concensus.
2. There is some confusion about the timing of the XMSR earnings release. Apparently, management seems to have pushed the date out by about a week, and anything that veers from the “expected” worries investors. I am hearing that XM’s later date is to give management a chance to get a better handle Q4 to give investors a tighter range going forward.
3. NPD data and Bridge Ratings came in weaker than last year, so investors are bracing for lower than expected sales this quarter.
4. Auto sales had been sluggish due to higher gas prices, although it is expected that there will be a bump in Q4 as the price of oil retreats.
5. Churn is always a concern.
6. The RIAA lawsuit against XMSR, and concerns that they might have to pull portable devices from the market.
7. Continued concerns about the FM modulator issue with the FCC
8. There is usually a big holiday sales boost for satrad in Q4, but there are concerns about competition, including Microsoft Zune and iPod-ready car radios (although i-Pod ready car radios are also mp3 and satrad ready).
9. Inventory concerns at the big three auto manufacturers.
10. Resistance from NAB regarding free trials
11. Compliance issues regarding repeater strength
Readers thoughts? If you have any comments that you would like me to post, please e-mail me at ssgfive@yahoo.com10/25/2006 07:20:00 AM
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