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Old 08-03-2005, 07:01 PM   #76
Renaissance Man
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Quote:
Originally Posted by Amnesia
Sorry, but I can't avoid a semantic argument.

Let's say that your mother was 19 years old when you were born.

When you were 1, she was 20. You were 5% of her age.
When you were 2, she was 21. You were 10% of her age.
(...)
When you were 19, she was 38. You were 50% of her age.

Are you catching up? Do you think that you'll ever reach the same age as her?

I personally don't know whether or not Sirius will ever have the same number of subscribers as XM, but the fact that SIRI started the year with 11% market share and ended with 26% does not mean that they are catching up.

The only way that Sirius can catch up is to consistently sign up more subs per quarter than XM. And logically, that means that every quarter that they sign up fewer subs than XM they are falling farther behind.
Your comparative model is flawed. You are comparing apples and oranges.

The age difference between two humans is a constant. There is no variable. In one year, both will be exactly one year older. So it is impossible for one to catch up.

SatRadio subscriptions are not constant. There are variables.

There is a variable rate of growth. One company may do better one month or year, and vice versa.

XM had a year's head start in the business, which was to their definite advantage. But with Stern, Martha Stewart and NASCAR coming on board in the near future, as well as Sirius having exclusive rights to three of the four major sports--those are huge factors in Sirius's favor.

Sirius will see a substantial increase in subscriptions and ad revenue from these programming additions.

We should also start to see some portable receivers coming from major manufacturers in the second half of 05. That will result in another significant boost in subscriptions.

At the end of this year, Sirius is expected to have at least 33% of the subscriber market. Considering that when they opened their doors for business about three years ago they had ZERO%, 33% is impressive.

Even if Sirius is unable to quite catch XM in the future, it's irrelevant. Because it can still be a very successful and profitable company in a few years, with millions of satisfied customers.

Sirius is clearly the leader in procuring the big names and best programming. Which leads me to believe they will eventually win the race for the most subscribers.

XM got the lead out of the gate, but what matters is who crosses the finish line first. And this race is a LONG way from over.

I'm a patient individual who realizes that races are often won by those who don't give up, even if they're temporarily behind.

I'm an optimist, you're a negativist. I'm happy to see the glass half full, while you gripe that it's half empty.
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Old 08-03-2005, 07:18 PM   #77
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Quote:
Originally Posted by Renaissance Man
I'm an optimist, you're a negativist. I'm happy to see the glass half full, while you gripe that it's half empty.
Not at all. I wasn't offering any opinion on the future state of XM vs. SIRI market share, just pointing out that the fact that SIRI's market share has increased is only to be expected.

You're right---the difference between a child's and mother's ages is a constant. But you do see that even with a constant age gap, the child's age as a percentage of the mothers will keep increasing, right?

The situation with XM and SIRI is variable, as you pointed out. But the difference is only to SIRI's disadvantage. In my original example, the child and parent each gained one year every cycle. However, what if the parent aged 1.5 years for every year that the child aged?

When you were 1, she was 20.5. You were 5% of her age.
When you were 2, she was 22. You were 9% of her age.
(...)
When you were 19, she was 47.5. You were 40% of her age.

This example---though nonsensical for humans' ages---is more analogous to the situation with XM and SIRI sub counts. Every quarter, XM gets more subs than SIRI. You'll see that SIRI's market share continues to grow (as does the age percentage in my example), but the difference in the number of subscribers continues to grow as well.

As I mentioned before, the only way to reverse the trend is for SIRI to get more subs than XM each quarter until the deficit has been made up.

Again, I am not saying that "more subs is better" or anything like that. I'm just saying that statements like:
Quote:
Originally Posted by Renaissance Man
Considering that when they opened their doors for business about three years ago they had ZERO%, 33% is impressive.
don't really make logical sense. As I hope you can see from my examples, market share growth is inevitable when you start with 0. There's nowhere to go but up. Even as the gap in subscriber counts grows, the market share percentage will continue to climb.
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Old 08-03-2005, 08:11 PM   #78
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Quote:
don't really make logical sense. As I hope you can see from my examples, market share growth is inevitable when you start with 0. There's nowhere to go but up. Even as the gap in subscriber counts grows, the market share percentage will continue to climb.
You are the one who is making no logical sense.

Percentage of growth is clearly a variable.

There is rapid growth, moderate growth and slow growth.

The fact that Sirius rapidly gained a sizeable percentage of the subscriber base in such a short time, clearly indicates that it is a strong company.

If Sirius didn't exist, and a weaker company not as well run had entered the fray against XM, there is no mathematical law or guarantee that says they would have that same 33% market share in the same amount of time.

Another company might have only been able to manage 5% market share in those three years, which is not rapid growth.

If a newcomer entered the personal computer manufacturing field today, and in three years managed to capture one third of the market, heads on Wall Street would indeed be turning.

However, if a lesser company entered the same field at the same time, and only managed to capture 1% of the market in three years, not many people would be looking very hard.

So the fact that Sirius has captured a significant percentage of the market in such a short time, is IMPRESSIVE, to say the least.

I'm sorry you have to be such a negativist. Optimism is so much better.
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Old 08-03-2005, 08:17 PM   #79
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Quote:
Sorry, but I can't avoid a semantic argument.
Exactly. Well put.
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Old 08-03-2005, 08:24 PM   #80
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Considering that when they opened their doors for business about three years ago they had ZERO%, 33% is impressive.
33% isn't bad. But when you consider that they had to spend about a billion dollars on content beyond their original plan, including overpaying for numerous items, including NFL, Stern, Stewart, and NASCAR. Yes, it is my opinion.

But when you consider that they have had to pay Penske to order factory equipped vehicles. Pay Radio Shack a piece of the action to get them to sell them. Buy the radios for Chrysler to put in their cars. And we don't KNOW how much they're paying Ford yet. Yes, XM has a revenue share deal with GM -- but crap, they aren't having to pay the rest of them, and GM was, at the very least, a groundbreaking commitment.

Considering Sirius' massive spending (which has left them heavily diluted AND in deeply in debt), I'm not sure 33% is that great. At one point, most everyone thought this might be a 60/40 or even 52/48 deal when equillibrium is reached. Now, I'm not sure if Sirius will be able to get beyond 40% or not. We'll see.
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Old 08-03-2005, 08:37 PM   #81
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It's sad that a few people here are quite negative about Sirius, and can find virtually nothing good to say about the company.
Okay, for you this is about optimism. That's fine. My interest is in objectively looking at the two companies to determine which is a more sensible investment, or whether, in fact, they are similar and both worthy of an investment.

Quote:
2Q-05 revenue up $39 million from 2Q-04, a 295% increase.
In 2Q-04, the revenue of this company with a multi-billion dollar investment was equivalent to the annual revenue of a small steak house. I'm sorry, but tripling that is not a major accomplishment.

Quote:
Subscriber acquisition cost reduced 32%, from $234 a year ago to $160.
Again, that sounds great until you compare it with XM (assume the one -year head start, even though it is wrong) -- XM's SACs for Q2'04 were $57, down from $80 the previous year. The 234-160 doesn't seem quite so impressive when you put it in context.

Average monthly churn only 1.4%.

Quote:
XM's churn was 1.4%, after a 30% price increase at the end of the last quarter. Also, Sirius has carefully crafted a deal with DCX which avoids any churn on OEM subs until after Q2.
Quote:
Sirius shares are up some 45% since late April.
Okay. Sirius shares ran up at the end of last year on irrational exhuberance, too. Perhaps you want to have a look at Goldman Sachs' remarks of today.

Quote:
Sirius stock lost only 13 cents per share. Most analysts expected 15 cents. (XM stock lost seventy cents per share the same quarter.)
Duh. Sirius has 1.3 billion shares outstanding while XM has 221 million. That matters.

Quote:
2005 total revenue is expected to be 10 to $15 million dollars higher than previously predicted.
Yes, but assuming SACs of $100, their SACs will increase by $30 million over the previously predicted figure.

Quote:
Net subscriber additions for 2Q-05 up 184% over 2Q-04.
This is great. But it is, once again, a misuse of percentages. Percentages do not make sense when you try to use them this way. Yes, it is up 184% maybe, but up from what? A meaningful number? Of course, not. When the company is stablized and out of its startup phase, you could use this argument. Trying to use this metric at this point is just fodder for those who don't know when they're being fed a line of crap.

Quote:
2005 year-end subscriber guidance increased from 2.7 to 3 million.
Great. You want to know how they could have 5 million subscdribers by year end? Just drop free radios from helicopters. You drop enough of them, a couple million will subscribe. Does it make sense to do it, though?

Sirius will make its 3 mln. But there is a reason they just borrowed half a billion dollars. They need it if they are going to compete against XM who can pricecut indiscriminantly going into Q4. And they know it.

[/quote]
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Old 08-03-2005, 09:45 PM   #82
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Quote:
Originally Posted by FrontMed
Again, that sounds great until you compare it with XM (assume the one -year head start, even though it is wrong) -- XM's SACs for Q2'04 were $57, down from $80 the previous year. The 234-160 doesn't seem quite so impressive when you put it in context.
Yet another of FrontMed's phony statistics is exposed.

From an Associated Press article dated 29 July 2005:

"The company spent $98 per gross subscriber addition, a 3 percent improvement from an average customer-acquisition costs of $101 in last year's second quarter."

http://www.detnews.com/2005/technolo...ech-262981.htm

And don't forget, the AP is taking their figure directly from XM's own financial report. According to a neutral source article I posted earlier, XM's true acquisition cost is even higher than what they claim.

So Sirius has closed the gap significantly.
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Old 08-03-2005, 10:12 PM   #83
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Quote:
Originally Posted by Renaissance Man
"The company spent $98 per gross subscriber addition, a 3 percent improvement from an average customer-acquisition costs of $101 in last year's second quarter."
SAC = Subscriber Acquisition Cost
CPGA = Cost per Gross Addition

SAC does not equal CPGA.

FrontMed is correct, do your research.
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Old 08-03-2005, 10:34 PM   #84
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Quote:
Originally Posted by StoliMike
SAC = Subscriber Acquisition Cost
CPGA = Cost per Gross Addition

SAC does not equal CPGA.

FrontMed is correct, do your research.
Let's get on the same page.

The 160.00 Sirius figure I mentioned IS their CPGA.

Direct quote from Sirius press release:

"The company reported subscriber acquisition costs (SAC) per gross subscriber addition of $160 for the second quarter of 2005, a 32% improvement over SAC per gross subscriber addition of $234 in the year-ago quarter."

http://biz.yahoo.com/prnews/050802/nytu049.html?.v=19

So I am correct that Sirius has recently significantly closed the gap in this regard. You and FrontMed are the ones who need to do your research.
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Old 08-03-2005, 10:42 PM   #85
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Quote:
Let's get on the same page.

The 160.00 Sirius figure I mentioned IS their CPGA.

Direct quote from Sirius press release:

"The company reported subscriber acquisition costs (SAC) per gross subscriber addition of $160 for the second quarter of 2005, a 32% improvement over SAC per gross subscriber addition of $234 in the year-ago quarter."
SIRI's SACs for Q2 were 160. SIRI does not provide CPGA figures, and I have not [yet] computed it for Q2. I would guesstimate it at between $280 and $325.

Subscriber Acquisition Cost (SAC) is a subset of the base figure used in computing Cost Per Gross Add (CPGA). That is, CPGA includes costs that are not part of SAC.[/quote]

Quote:
So I am correct that Sirius has recently significantly closed the gap in this regard.
Well, they should have and they have closed the gap a bit. But they're behind schedule, way, WAY, WAY behind where XM was at the same point in the growth curve -- which is what you have to look at.

This is the point of my original post -- if one really researches and understands both businesses, it makes little sense from an investment standpoint to have your money in Sirius. That is not to say that you might not make more on Sirius -- in fact, you are taking much higher risk putting your money in Sirius so the potential for a better return is there.

I can tell you this. If Stern fails to deliver a large number of new subscribers in Q4/Q1 -- hundreds of thousands, at least -- Sirius will not be a money-making investment at its current level. Sirius has committed 10% of its next five years projected gross revenue to Stern, NFL, Stewart, and NASCAR -- mostly Stern. If Stern flops, this company has a problem that will drag it down for a long time to come.

I believe Mel knows Stern cannot pay for himself at Sirius, and will sensibly figure out other ways to use him. Perhaps he'll sell away his programming exclusivity to other radio -- terrestrial or even XM. There was the TV deal today, but one really wonders whether Sirius gets any of it.

It is very likely that on 1/1/06, Stern is going to be one of the most underutilized half billion dollar assets in the country.
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Old 08-03-2005, 10:44 PM   #86
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Sirius 2Q-04 CPGA---234.00
Sirius 2Q-05 CPGA---160.00

XM 2Q-04 CPGA------101.00
XM 2Q-05 CPGA-------98.00


We see who has made much greater improvement in the last year.
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Old 08-03-2005, 10:46 PM   #87
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front med is trollin for shares or money. he's a basher of sirius and he is entitled to his opinion but charts don't lie. both sirius and xm shares have performed well in the last year but shares of sirius have outperformed xm since nov 04.

i think the trend will continue into 2006 and if howard stern brings 23% of his 12 million fans i think we all know that siri will perform better than xm in 2006

both are good investments. i don't understand why someone who bashes sirius comes here other than the fact that he states that he has options and has reason to bash sirius.

http://finance.yahoo.com/q/ta?t=2y&s...z=m&q=l&c=xmsr
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Old 08-03-2005, 11:25 PM   #88
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Quote:
Originally Posted by 4BAMA
front med is trollin for shares or money. he's a basher of sirius and he is entitled to his opinion but charts don't lie. both sirius and xm shares have performed well in the last year but shares of sirius have outperformed xm since nov 04.

i think the trend will continue into 2006 and if howard stern brings 23% of his 12 million fans i think we all know that siri will perform better than xm in 2006

both are good investments. i don't understand why someone who bashes sirius comes here other than the fact that he states that he has options and has reason to bash sirius.

http://finance.yahoo.com/q/ta?t=2y&s...z=m&q=l&c=xmsr
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Old 08-03-2005, 11:28 PM   #89
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Quote:
Originally Posted by FrontMed
SIRI's SACs for Q2 were 160. SIRI does not provide CPGA figures, and I have not [yet] computed it for Q2. I would guesstimate it at between $280 and $325.

Subscriber Acquisition Cost (SAC) is a subset of the base figure used in computing Cost Per Gross Add (CPGA). That is, CPGA includes costs that are not part of SAC.
More proof you don't know what you're talking about. You have it backwards.

Sirius DOES provide the CPGA in their latest financial statement, but they do NOT provide the separate SAC subset figure you mention.

Direct quote from Sirius's public financial statement:

"Subscriber acquisition costs per gross subscriber addition $160"

http://biz.yahoo.com/prnews/050802/nytu049.html?.v=19

Please note the words "costs per gross subscriber addition". That's their CPGA, friend.

So your claim that their CPGA is actually 280-325 dollars, is either sheer ignorance or an outright lie on your part.
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Old 08-04-2005, 12:02 AM   #90
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Quote:
Originally Posted by 4BAMA
front med is trollin for shares or money. he's a basher of sirius and he is entitled to his opinion but charts don't lie. both sirius and xm shares have performed well in the last year but shares of sirius have outperformed xm since nov 04. i think the trend will continue into 2006 and if howard stern brings 23% of his 12 million fans i think we all know that siri will perform better than xm in 2006
If Sirius's hardware partners get some portable receivers on the market before the Christmas shopping season hits full throttle, I think Sirius will outperform XM in virtually all important categories in 2006.

If that happens, look for them to pass the 40% mark in subscriber market share by the end of 06.

The naysayers blather that the Stern deal will sink the company, but that's BS. Stern will easily draw in a seven figure number of new subscribers over the five years of his contract. Not to mention an enormous amount of advertising revenue. There are also thousands of his hardcore fans who will happily fork over a few extra bucks a month for Stern's premium channel.

And Sirius isn't a one trick pony. The NFL, NBA, NHL--and eventually NASCAR--will also bring in a lot of new subscribers and advertising revenue.

The naysayers snicker at the NHL deal, but they won't be laughing when Sirius gets things going in Canada. Hockey is enormously popular there. It's pretty much the national sport. A lot of Canadians are licking their chops at the thought of being able to get virtually all of the NHL games on satellite radio anywhere in the country.

Martha Stewart will bring a lot of women on board, as well as advertising revenue.

Sirius is doing just fine. XM got out of the starting gate first, but that doesn't mean they will necessarily win the race.

DirecTV was once much larger than Dish Network, but now Dish has easily surpassed them. In fact, if the FCC hadn't nixed the deal, Dish would have bought DTV a while back.
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