Sirius Satellite Radio (SIRI),
a favorite stock among traders and investors, is struggling to make money
and its stock price chart shows it. Born in 1994 with great expectations
for satellite radio, SIRI climbed to almost $70 before its price bubble
burst.
Since trading as low as 40 cents in March 2003, SIRI has been on volatile
ride.
Currently the stock is in a modest upside.
What's the future of Sirius? Many investors are betting that Sirius and
XM Satellite Radio (XMSR)
will merge, giving the combined entity huge cost savings. But who knows
if a satellite radio company can ever make money. How can it afford to
keep paying big names like Howard Stern and Oprah Winfrey? Where is the
revenue growth to sustain those huge pay checks?
Cost cutting can be effective in the short run, but for revenue growth
and profitability to occur, satellite radio needs sustained, strong subscriber
growth and that is unlikely to happen.
With free radio going strong and a host of other listening offerings
available to consumers, there is plenty of serious competition for satellite
radio. And, in my (RAH) opinion, much
of its programming is less than compelling. Besides a few big-name personalities,
live sports coverage, news and weather much of the programming is tedious
and repetitive. For example, who wants to listen to the same comedy routines
day after day? Why tune in to a particular sports show during the off
season? And how many salad recipes do you need from Martha Stewart?
Satellite radio is a great concept, at least on paper, but its long-term
viability is yet to be determined.
Related Article:
Price Patterns - A Bubble Top
Is an Extreme Pattern
Two Losers Do Not Make
a Winner - Avoid Satellite Radio Stocks