Sirius And XM: When Nothing Means Something (SIRI)(XMSR)

The last couple of days have seen Sirius come out with encouraging numbers for year-end subscribers and cash flow and XM reporting figures that appear to be a slight disappointment.

Oddly enough, the stocks have not moved much. Sirius hit $3.64 four trading days ago and was as low as $3.70 this AM. It had run up to $3.84 on its announcement. The stock is still trading just off its 52-week low of $3.50. And, volume is low. That is never a good sign of interest.

Ditto XM. It announced subscriber figures of 7.625 million for year-end. It’s stock hit an intraday high of $14.75 four days ago. It opened at $14.70 today after running up to $15.75 two days ago on the SIRI news. Again, volume is light.

Satellite radio was the "next big thing", but that was three or four years ago. Now, it would appear that if both companies are cash flow positive in Q4, Wall St. does not believe that it will continue into next year. The rate of new subscription adds for XM has already slowed. And, with the impact of Howard Stern behind Sirius, it may follow in XM’s slow steps.

Of course, with iPods, music to cell phones, and the new Samsung hardware that lets handsets get local TV stations, satellite radio is being pushed into a smaller and smaller corner.

If stock prices stay low, investors will despair. If investors despair, volume and interest go away.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.