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Sirius XM Investors Need to Get a Clue

Stocks in this article: SIRI LMCA AAPL NFLX TWX AMZN

Although Sirius's stock has done well over the past the couple of years, let's not forget what got it there. It hasn't been due to stellar results. Don't forget, Sirius has been actively buying back its stock. And at the same time, Liberty has been buying its way up to majority ownership. Essentially, very little of the stock gains have been organic.

John Malone is now laser-focused on maximizing all of the value that remains in the company. Although Sirius does produce a decent amount of cash flow, the company doesn't have a future against better-run IP-based companies. Apple's (AAPL) iTunes Radio can't be ignored.

Investors are fooling themselves if they don't see that market dynamics are changing. And Sirius does not have a strong track record of innovation. How long can this company live by the mantra "content is king?" Maybe in 2001 that was the case. Not today.

Investors who keep repeating this myth needs to look at the deals Netflix (NFLX) has begun to make with the likes of Time Warner (TWX). Netflix is demonstrating that -- with enough money -- kings can be captured.

The same goes for Amazon (AMZN), which is suddenly interested in the sound of music.

By contrast, aside from a few deals here and there with auto manufactures, what has Sirius ever done to demonstrate it can maintain a foothold inside the car? Let's be honest for moment and stop pretending Sirius is better than its record. Now's not the time to get arrogant.

Investors should thank Liberty that Sirius wasn't a broken record when it was saved.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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