Sirius XM: Born to Lose, Destined to Fail?
Until Sirius XM shows signs of embracing the future and becoming a growth company, its stock will pinball in a frustrating range. The big money wants to know about growth. Real growth, not modest growth. And while that naturally includes continued improvement at Sirius XM's core, major investors expect to see Sirius XM leverage the cross- and multi-platform opportunities that not only define the future, but have started to take hold of the present.
Over the past year, I have argued that most terrestrial radio operators should start selling off their brick-and-mortar locations. The process of consolidating multiple stations in one or two buildings as opposed to three, four, five or six has been going on for quite some time. In retail, this strategy has started to happen at big boxes such as Best Buy.
In radio, however, consolidating space is not enough. Why have a building for salespeople to surf the Internet? Let them work from home and hit the streets like they're supposed to. Make the local Starbucks the new office/meeting room. Why pay to maintain big radio towers in an age where they're about to become obsolete? If I ran a terrestrial radio company, I would have started that process yesterday in select markets.
Pipeline and connectivity issues will resolve themselves. If companies such as Intel have their way -- and they will -- all you'll need to do is push a button and you'll be connected in your car. If you live in the middle of nowhere, you'll need to find some alternative just like millions of rural Americans do now for things like television and Internet. A market will always exist for those scraps.
By a similar token, Sirius XM must consider the day when it's stuck with satellites orbiting space, but nobody under 80 years of age listening to any of the content they beam back to Earth. Marrying yourself to satellite delivery via radios and expensive, clunky in-home receivers is akin to an insistence on communicating as a pen pal. You'll find yourself lonely and left behind.
With this in mind, after Sirius XM's conference call, I will write more about its future -- and the future of the audio-entertainment space. Because no matter what Mel tries to wow us with next week, that's really all that matters for both the company and the stock in both the near- and long-term.
I am long INTC.