This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How Apple Will Force Sirius to Face the Music

Stocks in this article: SIRI AAPL P GOOG MSFT

When Pandora released its audience metrics for March, it showed the company's share of total U.S. radio listening grew 13% year over year to 9.11%. Last year, Pandora had 8.05% share. While reporting that it had 75.3 million active listeners, Pandora also achieved a landmark of 250 million registered users in the U.S.

Pandora's music genome platform, which gives listeners the ability to customize their music, has helped turned Pandora into a sticky service. This means that Americans love their jukebox. The problem is Pandora doesn't know how to make money. The more it grows in popularity, the more money it has to shell out in royalties.

Likewise, Sirius' main issue is that its business model is too closely tethered to auto sales. By contrast, Pandora's personalized music service can be accessed from a variety of ways, including tablets, PCs, smartphones and most car audio systems -- pretty much, anything with an internet connection. But Pandora also has a growing subscription service and the ability to grow advertising revenue.

As royalty fees continued to chew through the company's bottom line, Pandora hopes to mitigate this by raising the subscription service. The other potential growth area is advertising. Advertising revenue can become that dominant second stream of revenue Sirius lacks. Sirius has also talked about the connected car.

Its acquisition of Agero has excited investors. But Sirius is a radio/entertainment company. I don't see how Sirius can out-innovate Apple or Google (GOOG) in an area where technological advantages are required. Not to mention expensive capital investments. Sirius will not outspend Apple or Google.

But if it does buy Pandora, Sirius will raise its own acquisition profile. Its entertainment offerings immediately become more attractive. It's not out of the question that Microsoft (MSFT) would become interested. And with Pandora stock in a freefall, now is the time for Sirius to face the music and make the deal.

At the time of publication the author had a position in AAPL.

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

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs