XM Satellite Radio vs. Sirius Satellite: Which Stock to Buy?

Continuing with the rivalry that every oligopoly sector provides, I will try and tackle the radio industry this update. However, while my other contests have been focused on the technical and fundamentals of each company, this update will be a little different as finding a winner will not be so rudimentary.

Looking at the radio giants of XM Satellite Radio (XMSR) and Sirius Satellite (SIRI), the positives and negatives are not as transparent as originally desired. Speaking in terms of fundamentals, it does seem like XM has the slight advantage. The company has the potential, according to Yahoo Finance, to grow over 25% over the next five years and grow almost 14% this year. Compared to Sirius?s potential growth of negative 28% this year and a growth only limited to 20% there might be an advantage to buy XM in the long run. However, what is interesting to note is that out of the last nine actions committed by financial institutions, XM has been downgraded six times, while during the last eight actions of Sirius, the company has been upgraded six times. Such statistics post a conundrum for investors with fundamentals spread all over. In terms of actual data, both companies have posted numbers surprising investors in a negative way. Three out the last four earning results, XM has failed to even meet earnings expectations illustrating a possible slowdown in terms of margins. Sirius did only slightly better only failing to meet expectations two out the last four reports. Margins for both in terms of revenue are both similar and adequate, but profit has been negative for over three years severely underlined by poor cash flow from operating margins and other areas. Therefore, the numbers for both companies may not be completely reflected over the power each contains in its industry, but do not provide any relief for investors looking to get into to one of these stocks.

In terms of technical analysis, both again seem to provide a conundrum in terms of a better buying opportunity. Since 2003 Sirius has grown about 100% in terms of potential capital gains. However, such a statistic is flawed as the reflection of increased fluctuations during the period makes this stock too volatile to properly invest in. There is also an important notation that the stock also decreased 50% in value during one year in 2002 illustrating the difficult nature of buying this stock at the right time. Sirius currently also looks like it has reached its maximum level at about 12.00 and does not provide much upside. Like Sirius, XM had its own increase of nearly 900% during the run from 2003 to 2005. However, since then the stock has been on the decline falling nearly 50% worrying investors if the stock will ever rise again.

Nevertheless, while some investors may argue that this is the perfect time to invest in an oversold equity, when looking at the potential recession in sight and the idea that such radio brands produce luxury items, there is little assurance that the stocks will rise to its glory days. Personally, I think the radio industry is a dying one with little potential to grow in the next five to ten years. Such a sentiment along with the technical and fundamental facts have allowed me to stay clear of both equities as I do not see any encouragement from any of the factors which makes me want to buy either Sirius or XM Radio.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr

Learn Satellite Radio

Satellite radio is actually composed of two Boeing HS 702 satellites orbiting our atmosphere and aptly named "Rock" and "Roll". One is located at approximately 85 degrees west longitude and the other at 115 degrees west longitude. Geostationary Earth orbit (GEO) is about 22,223 miles (35,764 km) above Earth, and is the type of orbit most commonly used for communications satellites. The first satellite to up, "Rock," was placed in orbit on March 18, 2001. "Roll" followed with it's launch on May 8. Satellite radio has a third HS-702 satellite on the ground ready to be launched in case one of the two orbiting satellites break down or fail.

Satellite radio's station on earth transmits a signal to its two GEO Satellites, which bounce signals back down to the ground. The radio receivers are programmed to receive and unscramble the digital data signal, which contains up to 100 channels of digital audio. In addition to the encoded sound, the signal contains additional information about the broadcast. The artist, song title and category of music are all displayed on the radio. In urban areas, where buildings can block out the satellite's signal, broadcasting equipment is supplemented by ground transmitters.

Each receiver contains a unique manufacturer's chipset. Satellite radio began delivering chipsets to its manufacturing partners in late September or early October of 2000. The chipset consists of two custom integrated circuits designed by STMicroelectronics. Satellite has partnered with Pioneer, Alpine, Clarion, Delphi Delco, Sony and Motorola to manufacture satellite capable car radios. Each radio receiver uses a tiny, car-phone-sized antenna to receive the digital signal. GM has invested about 100 million dollars in digital satellite radio, and Honda has also created a contract to use these same radios in its cars. General Motors first began installing satellite radio receivers in specific models in late 2000 and early 2001.

For approximately twelve dollars per month, subscribers can listen to crystal clear digital sound. For this small price, music aficionados receive up to 100 channels of music, talk and news. They can also listen online via streaming audio service with over 70 channels. Most of the stations received are commercial-free, with none of the channels having more than seven minutes of ads per hour. Satellite advertisers include USA Today, BBC, CNN/Sports Illustrated and The Weather Channel. The service is clean & clear and more of what the surveyed population asked for. The future of satellite radio is clearly bright.

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Is Satellite Radio For You?

Well if you like to listen to music the answer is yes!

But you probably already have a radio that works quite nicely and are wondering why you might want to switch, right?

Satellite radio is a paid subscription - it works via a satellite feed so you can listen to the radio anywhere you want and there is no range restrictions so your favorite song won't become garbled with static as you drive down the road out of range. It works like satellite television, except it can travel with you. A satellite radio can go in your home, your car or you can carry it around with you. It provides crystal clear digital sound no matter where you are and is commercial free.

Satellite radio can really open up the range and choices of music. With satellite radio subscriptions, you typically have access to several music channels, which reach all genres and subgenres of music. The best providers will also provide you dozens of channels for the latest news, talk radio, and information, along with local traffic and weather forecasts and all the sports events you could want.

XM Radio is rapidly growing and services over 2 million listeners providing 68 music channels. With this satellite radio, you can get country, rap, classical, bluegrass, rock, reggae and most anything else you can imagine. IN addition, there are over 30 channels just for news , sports, talks shows and other entertainment programs that don't include music. And if that's not enough there is another couple of dozen channels that provide weather and traffic for most major cities.

If you want satellite radio you will need a reciever and antennae to pick up the satellite feed. This equipment is state of the art, and the best subscription services also offer AM and FM as well as CD accessibility. Satellite radio can be set up to work with your existing home entertainment system, in your car or as a portable that you can bring with you.

Some of the new satellite radios and receivers are quite small and lightweight and good for carrying around. All satellite receivers will conveniently display the channel, song title, and artist name. If it's a sporting event, they abbreviations for each team will be shown so you can find that game you are looking for instantly instead of having to wait until the announcer mentions one of the teams.

Of course, satellite radio is perfect for listening to in the car since you won't have to fiddle with tuning knobs or try to find a new station as you drive out or range of what you are listening. Coneniently, many new cars are coming equipped with satellite radio service and even offer it free for 30 days. Don't worry, though if you don't want to pay for the service after your trial is up, your radio receiver will still work with the usual AM and FM channels.

Lee Dobbins writes for a2z-satellite where you can find more about satellite services including satellite tv, radio and internet.