SIRI- I am sure SIRI has a great product. So did WebVan but they just couldn't get the numbers to work. I think that the Satellite radio group will have a hard time attracting enough subscribers to make the numbers work before they run out of money.
When these guys first started out they claimed they could breakeven with 5 million subs. XMSR said 3, and SIRI said 2 mil. Now, as far as what I have seen, they are not committing themselves to where the breakeven is. SIRI has a much bigger problem than XMSR since they are so far away from their goal and have pretty much exhausted their ability to issue more shares.
SIRI has about 1.26 bil shares outstanding. Looking at this a bit different than yesterday. For SIRI make just 10 cents a share they would have to earn $126 mil - roughly $31 mil a quarter. (Yesterday someone mentioned a 70% net profit on revenues. Now tell me how that happens when income taxes take will take 40% of your per-tax earnings?) SIRI simply has too many shares outstanding at this sytage of the game to become profitable anytime soon. This last quarter they lost $169 mil. Last year they lost $107 mil. Revenues were $19 million. Now how do you get from losing $169 mil to earning the $31 mil I mentioned above when you start with a base of just $19 mil in revenues? You need a bunch of cash to carry you through. SIRI has about $500 mil. It looks to me that they need to raise more cash to reach profitability.
Also, last quarter SIRI signed up about 61,000 a month. This next quarter they are looking at about 100,000 a month. XMSR says about 40% of those folks getting a Satellite radio that comes with a new car cancel their subscription. No one will say how many of their subscribers cancel when buying a straight subscription. SIRI says they had 25,000 de-activate the service. Should this be fiigured off the 111,000 subscribers they had as of last year at this time thinking that most that subscribe keep it for a year. If so, that is a big percentage of cancelations. Also, these folks are probably the "low hanging fruit". The early enthusiast are usually the most loyal.
You asked if anyone owned one here. Personally, I don't know of any. I know a college age employeee that used to have it, but that is it. He received it as a gift but never renewed.
Anyway, these guys will be interesting to watch.
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