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Sirius XM: A Tale of Two Stocks

Stocks in this article: SIRI LMCA AAPL MSFT GOOG

After a stunning second-quarter report, during which management raised guidance, $2 per share was never seen or heard from again. Sirius had bigger fish to fry. Investors still remind me of my $1.65 prediction, even though I was off by only 8%. But my biggest gaffe was missing the ride up to $3 and to the $3.60 level. Essentially, since reaching $1.80, the stock has more than doubled.

What can I say? I blew it.

Great Expectations?

Today, Sirius exemplifies a tale of two companies. Karmazin, who was credited with merging two satellite companies and almost killing them both, is no longer running the ship. Liberty is now in full control of the company. Sirius is no longer bleeding subscribers and is now posting record numbers for revenue, cash flow growth. And, as expected, management has said "the best is yet to come."

Even so, I don't expect that I will ever re-establish a position in this stock, whether long or short. There are still too many unknowns.

Apple (AAPL) has entered Sirius' domain on the dashboard. I expect that at some point both Microsoft (MSFT) and Google (GOOG) will follow suit.

It will be challenging for Sirius to compete. But I wouldn't bet against Sirius' ability to survive. It's been through much worse.

At the time of publication, the author was long AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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