XMSR

[David Randolph]

1. Profile

XM Satellite Radio Holdings Inc (XMSR). The Group's principal activity is to design and develop the XM Radio System, which was formed for the purpose of operating a digital audio radio service (DARS). The Group provides audio entertainment and information programming for reception by vehicle, home and portable radios through its high-power satellites Rock and Roll. These satellites offer 100 channels which cover music, news, talk, sports and children's programs with clear sound and coast-to-coast coverage. XM Radios are available under the brand names Sony, Pioneer and Alpine. The Group also provides music formats and delivers a wide range of ethnic and informational programming. The Group owns two FCC licenses to provide a satellite digital radio service in the United States. Radio services are transmitted through the commercial satellites.

2. Technical Analysis

2.1. Long Term Chart



2.2. Medium Term Chart



XMSR broke its ascending trendline on the downside. The trend is bearish now.

2.3. Short Term Chart



I believe the $27.09 support will soon be gone and turned into a resistance level. We have three descending trendlines to put a cap on any advance. I would like to place my position on TL3, which today stands at $28.66 (a 5% rise from last close levels).

3. Fundamental Analysis

3.1. Outstanding Shares



This company sold shares in a massive way since its IPO. It won't survive if investors are not willing, or not able, to buy additional shares. In fact, the company now is worth 32 times more than in its IPO back in 1999, although the all history chart does not show it and although it lost $2.5 billion during that period.

3.2. Current Ratio



XMSR's current ratio has been deteriorating and it is now at a very dangerous level of just 1.15. If the company does not turn profitable fast or if the it isn't able to sell any more shares or bonds to finance operations it will face a liquidity crisis.

3.3. Revenues



There is very strong revenue growth. But, the company is still unable to generate a profit and  when it does (if it does), with so many shares it sold, it will probably be a small profit per share.

They sell their service at a loss and unless the company can change that it will cease operations in the future.

3.4. EPS



Although it looks like the company is reducing its losses, if you consider net loss it is losing more and more money and very far from profitability. This happens because if the number of outstanding shares increases the loss per share is diminished, even though the net loss is indeed rising.

3.6. Competitors



4. General Overview

The public loves XMSR, I don't.

There are two risks to XMSR:

1) If a bear market develops, as I'm expecting, the company may face serious liquidity threats.
2) The company may become profitable in the future, and then investors will see how earnings have been diluted. When the company finally makes 2 or 3 cents of profits per share people will feel very disappointed.

5. Trading Plan

I will sell XMSR short around today's open (probably it will be a higher open) for the 3 Stocks on Fire Portfolio. Then I'll update this analysis everyday until I buy to cover.

[AussieTrader]

This will no doubt make Sat Radio newsworthy today. SIRI have Stern and he and the CEO do the opening bell thing today.

http://www.marketwire.com/mw/release_html_b1?release_id=105018

[David Randolph]

This will no doubt make Sat Radio newsworthy today. SIRI have Stern and he and the CEO do the opening bell thing today.

http://www.marketwire.com/mw/release_html_b1?release_id=105018

Yes, SIRI will open about 1.5% higher, I hope it rises some more so  can short it at higher prices. I still want to see some more things about this $9B company.

Nice to see you Aussie 

[Gu$tavo]

There are severals insider sellings last month too (@ $ 28 / 29) ..

[shawFund]

What I see XMSR:

  SHORT TERM BUY

[KCScott]

IMO XMSR will drop.......... eventually.

For right now I still think there is way too much optimism about Satellite Radio's future for the capitulation needed. A lot of people got the hardware for Xmas so they will need to sign up with the service which will spike the revenues for the next quarter.

I also foresee SIRI and XMSR as possible buyout candidates by a media conglomerate looking to enhance content distribution. The smart play for either of these companies would be to offer webcast subscription of their content and also offer download sales of music like Apple.

Again, just my opinion.

[metro]

Interesting thread as fundamental work is very hard as often a stock does not trade according to its fundamentals for soem time. TA wise if you wish to short then can do so at resistance or a break of support. For a long play then then buying support or a break out. In either case s tight stop will make the trade low risk

[SmartWrasse]

I just bought and subscribed to Sirius, because they have the best sat radio hardware on the market-  S50.  This player is fantastic.  It records up to 50 hours of music like a television DVR by the way it recognizes your favorite stations.  You can load MP3's on the S50 and cary it around like an ipod.  It is very slick. Just became available in November.  It seems XM would lose business to Sirius just based on this difference in hardware. 

[shawFund]

I made $1,025 today buy-low sell-high on XMSR.

In $26.9, out $28.30 (5% gain in one day).

See my portfolio in "member corners" thread.

SIRI is also quite attractive at this price level.

May enter SIRI position later. Both oversold.

[netfishmademerich]

I have one of these radios.  It came with my 2005 Acura MDX.  You get a 3 month trial after which you can restart the trial if you call them.  I think the programming is just mediocre and seems to repeat itself every couple of hours all throught the day.  Also, even though the signal is carried via. satellite you will lose reception everytime you go under an overpass or enter a garage.  If you sign up for a multi year subscription the monthly fee can be as low as $8.  I don't know how a hand held unit will do due to the reception problem which is about the level of a cell phone.

[David Randolph]

Thanks for your insights 

Let me address them one by one:

There are severals insider sellings last month too (@ $ 28 / 29) ..

Thanks for the info Gu$tavo, we have the company selling shares, insiders selling shares, people with real knowledge of the company are selling.

What I see XMSR:

SHORT TERM BUY

Thanks for your view on XMSR shawFund 

IMO XMSR will drop.......... eventually.

For right now I still think there is way too much optimism about Satellite Radio's future for the capitulation needed. A lot of people got the hardware for Xmas so they will need to sign up with the service which will spike the revenues for the next quarter.

I also foresee SIRI and XMSR as possible buyout candidates by a media conglomerate looking to enhance content distribution. The smart play for either of these companies would be to offer webcast subscription of their content and also offer download sales of music like Apple.

Again, just my opinion.

Hello KCScott, you say there's a lot of optimism, and that's precisely when a stock may collapse. A lot of optimism leads to many people that bought the stock (despite of the very poor fundamentals) and now may need to sell if anything negative arises. But the negative news will only be public after a 50% or more correction, not now.

I think XMSR was bearish even before the general market started turning bearish (not much people see this too, I'm not bothered in being alone here), and probably this stock will decline even if the general market doesn't.

I think this company has no viable business plan and will continue losing money. Don't forget the market cap rose 32 times between 1999 and now, it is like the stock is trading at $390, coming from $12. Isn't that enough of hype?

Interesting thread as fundamental work is very hard as often a stock does not trade according to its fundamentals for soem time. TA wise if you wish to short then can do so at resistance or a break of support. For a long play then then buying support or a break out. In either case s tight stop will make the trade low risk

I agree with you metro, fundamental analysis is very hard work, but I think it will pay over the long run, as one can hold positions longer for larger profits when he is right. If we can aplly sound money management rules to that I think we have a recipe for above average returns over the long run.

Can you really watch a stock go up several bags only based on technical analysis? I find it a bit hard, since there are always so many false technical signals.

Just want to say that I love your posts, even though sometimes we don't agree, as it were to be expected 

I just bought and subscribed to Sirius, because they have the best sat radio hardware on the market- S50. This player is fantastic. It records up to 50 hours of music like a television DVR by the way it recognizes your favorite stations. You can load MP3's on the S50 and cary it around like an ipod. It is very slick. Just became available in November. It seems XM would lose business to Sirius just based on this difference in hardware.

Thanks for this info SmartWrasse, I still have to take a closer look on SIRI.

I made $1,025 today buy-low sell-high on XMSR.

In $26.9, out $28.30 (5% gain in one day).

See my portfolio in "member corners" thread.

SIRI is also quite attractive at this price level.

May enter SIRI position later. Both oversold.

I don't think buying oversold conditions for 5% profits is a good strategy (because you can lose big going against the trend), but I respect it shawFund. You now have a public portfolio shawFund? I'll take a look at your thread, for sure I'll learn, thank you, nice work 

I have one of these radios. It came with my 2005 Acura MDX. You get a 3 month trial after which you can restart the trial if you call them. I think the programming is just mediocre and seems to repeat itself every couple of hours all throught the day. Also, even though the signal is carried via. satellite you will lose reception everytime you go under an overpass or enter a garage. If you sign up for a multi year subscription the monthly fee can be as low as $8. I don't know how a hand held unit will do due to the reception problem which is about the level of a cell phone.

Thanks for your insight netfishmademerich 

What I think is, even if these companies eventually make a profit, after so much dilution the profit per share will be so small that stocks will tank anyway. And there's the real threat (at least to XMSR) that the company won't survive to see profits, because of a liquidity trap that is building on its balance sheet.

After responding and commenting on your posts, all I have to say is that I will continue holding my XMSR short position.

[David Randolph]

Yesterday was the 5th day XMSR touched support at $27.09. Apparently investors didn't like the news coming out of the company, even though I can read extreme hype there:

Samsung Introduces the First Complete Line of Portable XM Satellite Radios With MP3 Capability

XM Passport: The First 'Mini' XM Tuner Offers XM Technology in a Tiny, Portable Cartridge

XM and AGT Introduce the Sportscaster Satellite Radio With Special Features for Sports Fans and Sleek Two-Line Display Screen

Pioneer and XM Satellite Radio Achieve Major Milestone in Portable Audio with Pioneer Inno(TM), the Next-Generation XM2go Player with Live XM and MP3

XM Satellite Radio Tops Six Million Subscribers

Audiovox and XM Satellite Radio Introduce XM Passport: The First 'Mini' XM Tuner Offers XM Technology In A Tiny, Portable Cartridge

Audiovox and XM Satellite Radio Unveil the Audiovox XM Xpress Radio

These were all last 2 days press releases  I call this an haemorrhage of news, and it looks XMSR is desperate for investor's money.

If XMSR breaks $27.09 as I have little doubts it will, I can imagine the stock quickly collapsing to $20 a share.

I'll continue holding XMSR SHORT position.

[422fwhp]

update???

[shawFund]

XMSR makd a big move up today and it is a fact now that the short term trend is UP not DOWN.

Of course, after it touched $30, it may go down. $27 is its year low. The whole year this stock is within $26-$37 range.

If we buy low and sell today, we could have made 15% profit.

[Jimbo]

Deutsche Securities upgraded XM shares to "Buy" from "Hold," and raised his price target to $33 from $30.

http://finance.yahoo.com/q/ud?s=XMSR.