Yea... Kinda reminds me of all the moronic bashers who sat on this site over the last two years while SIRI continued to rise... #$%$ is your point?
1) Share Buyback, retiring shares decreases the pot
2) Inflation of share price, hedgies and MM'ers will have to pay 3X and soon 4X what they did a year ago to hoard shares and trade amongst themselves to control the SIRI market. You are already seeing signs of them backing off.
It would be great to close above....
Sentiment: Strong Buy
GM agreement w/ T for in-vehicle LTE a POSITIVE for SIRI
SIRI’s largest OEM partner, General Motors announced on Feb. 25th that it
entered into an agreement with AT&T to offer 4G LTE services in vehicles
beginning next year. Although this agreement appears to be a blow to Verizon
(which had been a front-runner for in-vehicle LTE integration), we believe there is
also a read-across for SIRI, long the dominant pay-for-entertainment option in
vehicles. The rollout of LTE at the OEM level might be seen as a direct threat to
SiriusXM. However, we believe that, on the contrary, LTE integration appears to
be a natural evolution of in-vehicle technology, and a long-term enhancement to
SIRI’s value proposition.
The biggest pipe (Satellite) gets a robust return path
With its constellation of 9 satellites, SIRI’s content lineup and ubiquitous
broadcast footprint offers consumers a unique, best-in-class audio experience.
Validating this is the fact that despite being the second largest pay-forentertainment
Co. in the U.S., with 24mn subs (trailing only Netflix), SIRI enjoyed
record sub additions in 2012 (2mn net adds). We believe the “holy grail” for SIRI
is leveraging new technologies, with LTE at the forefront of this opportunity. CEO
Jim Meyer plans to co-join SIRI’s unparalleled “pipe” (satellites), with a 4G
wireless terrestrial network. LTE integration enables SiriusXM to utilize a robust
return path – with the possibility for countless new services, enhancing the value
proposition of the product. Although LTE integration into vehicles might arguably
compete with SIRI’s own nascent telematics products, we view the cost/benefit on
the positive side. We believe the telematics opportunity will also eventually be
geared toward international markets given SIRI’s extensive OEM relationships.
IP-radio still not validated as a legitimate competitor
The key concern for SiriusXM is the potential for IP-based competitors, such as
Pandora, Spotify and even Apple/Google, to challenge SIRI for in-car
entertainment share. With the GM/T agreement, some might argue that an IP
takeover of the in-car experience is all-but-inevitable. We disagree for three
reasons: (1) Even if in-vehicle LTE displaces Satellite technology, it will be years
until we see ubiquitous integration into vehicles. After more than a decade of
service, SIRI finds itself as an OEM option in 50mn (20-25%) vehicles. (2) IPservices
do not have content agreements remotely comparable to SIRI’s offerings
(music, news, exclusive talk, weather, etc.) with long-term agreements in place,
and (3) the costs of streaming via cellular (LTE) is not fixed. The more a user
consumes, the higher potential overage charges, making IP-options more
expensive than they might seem; by contrast, Satellite Radio – a broadcast
technology – is available as a truly unlimited offering. We view the announcement
of GE’s LTE integration as a natural next step in the evolution of satellite radio.
Reiterate Buy rating on SIRI shares, $4 PO (30% potential upside).
Sentiment: Strong Buy