satellite radio

[MNBoxster]

Hi,,

I don't want to get into Flame Wars over this issue. But, consider these quotes directly from XM Radio Holdings, Inc. from an SEC required filing of a FORM 8K (which is essentially a summary of released Quarterly Earnings) filed with the SEC on 8/05/05:

"As of June 30, 2005, we had incurred capital expenditures of $1.4 billion and cumulative net losses approximating $2.4 billion from our inception through June 30, 2005 (this equates to a loss of $480/subscriber). We expect our cumulative net losses and negative cash flow to grow as we make payments under our various distribution contracts, incur marketing and subscriber acquisition costs and make interest payments on our outstanding indebtedness. If we are unable ultimately to generate sufficient revenues to become profitable and have positive cash flow, demand for our service may be insufficient for us to become profitable."

and

"We cannot estimate with any certainty the potential consumer demand for such a service or the degree to which we will meet that demand. Among other things, continuing and increased consumer acceptance of XM Radio will depend upon:

• whether we obtain, produce and market high quality programming consistent with consumers' tastes;

• the willingness of consumers, on a mass-market basis, to pay subscription fees to obtain radio service;

• the cost and availability of XM radios; and

• the marketing and pricing strategies that we employ and that are employed by our competitors.

If demand for our service does not develop and increase as expected, we may not be able to generate enough revenues to generate positive cash flow or become profitable."

and

"Our inability to retain customers, including those who purchase or lease vehicles that include a subscription to our service, could adversely affect our financial performance.

• We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our service as part of the promotion of our product. Currently, we retain approximately 60% of the customers who receive a promotional subscription as part of the purchase or lease of a new vehicle, but that percentage does vary over time and the amount of data on the percentage is limited. We do not know if the percentage will change as the number of customers with promotional subscriptions increases.

• We experience subscriber turnover, or churn, with respect to our customers as well. Because we have been in commercial operations for a relatively short period of time, we cannot predict the amount of churn we will experience over the longer term.

Our inability to retain customers who purchase or lease new vehicles with our service beyond the promotional period and subscriber turnover could adversely affect our financial performance and results of operations.

Higher than expected subscriber acquisition costs could adversely affect our financial performance.

We are still spending substantial funds on advertising and marketing and in transactions with car and radio manufacturers and other parties to obtain or as part of the expense of attracting new subscribers. Our ability to achieve cash flow breakeven within the expected timeframe depends on our ability to continue to maintain or lower these costs. If the costs of attracting new subscribers or incentivizing other parties are greater than expected through higher per-unit costs or higher than anticipated subscriber growth volume, our financial performance and results of operations could be adversely affected.

Large payment obligations under our distribution agreement with General Motors and other agreements may prevent us from becoming profitable or from achieving profitability in a timely manner."

and

"Failure to timely replace our existing satellites could damage our business.

We have been disclosing since the third quarter of 2001 a progressive degradation problem with the solar array output power of Boeing 702 class satellites, including both XM-1 and XM-2. Based on the consistency of the degradation trends and continuing analyses by BSS and us, our management adjusted the estimated useful lives of our in-orbit satellites, with effect from September 2002, to the period running through first quarter 2008 (approximately 6.75 years from launch). We and the manufacturer are continuing to watch the progression of the situation, including data from a satellite that has been in orbit longer than either of our two satellites by approximately 15 and 17 months, respectively. With this advance visibility of performance levels, we launched our XM-3 satellite in February 2005. XM-3 was placed into one of our orbital slots and beginning in April 2005 is being used to transmit the XM service. XM-1 was collocated with XM-2 in the other orbital slot (which allows partial use of XM-1 and XM-2 through the first quarter of 2008). With this plan, the ongoing construction of an additional satellite (XM-4) and contractual arrangements in place to provide XM-4 launch services, we believe we will be able to launch XM-4 prior to the time the solar array power problem might cause the broadcast signal strength to fall below minimum acceptable levels. We have entered into a contract to construct a spare satellite (XM-5) to be completed by the end of 2007 for use as a ground spare or to be available for launch in the event there is a launch or early operations failure of XM-4. However, we cannot assure you that such actions will allow us to maintain adequate broadcast signal strength, particularly in the event of a launch or operational failure of either XM-4 or XM-5. If either XM-1, XM-2, or XM-3 were to fail or suffer unanticipated additional performance degradation prematurely, or if there was a launch or operational failure of either XM-4 or XM-5, it likely would affect the quality of our service, and might interrupt the continuation of our service and harm our business. This harm would continue until we successfully launched and operated one or more additional satellites.
A number of other factors could decrease the useful lives of our satellites, including:

• defects in construction;

• loss of on board station-keeping system;

• failure of satellite components that are not protected by back-up units;

• electrostatic storms; and

• collisions with other objects in space.

In addition, our network of terrestrial repeaters communicates principally with one satellite. If the satellite communicating with the repeater network fails unexpectedly, we would have to repoint all the repeaters to communicate with the other satellite. This would result in a degradation of service that could last several days and could harm our business. Potential losses may not be covered by insurance."

and

"Digital radio broadcast services have been expanding, and an increasing number of radio stations in the U.S. have begun digital broadcasting or are in the process of converting to digital broadcasting. The technology permits broadcasters to transmit as many as five stations per frequency. To the extent that traditional AM/FM radio stations adopt digital transmission technology such as that offered by iBiquity and to the extent such technology allows signal quality that rivals our own, any competitive advantage that we enjoy over traditional radio because of our digital signal would be lessened.

Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world. According to an Arbitron study, approximately 20 million Americans listened to internet radio each week in January 2005. We expect that improvements from higher bandwidths, faster modems and wider programming selection will make Internet radio increasingly competitive, in particular with our new XM internet service.

The Apple iPod, a portable digital music player that stores up to 10,000 songs, allows users to download and purchase music through Apple's iTunes Music Store, which features over 1 million songs and 8,000 audio books. Apple has disclosed that it sold over 4.4 million iPods during its fiscal 2004 year. The iPod is also compatible with certain car stereos and various home speaker systems. Our recently introduced XM2go portable satellite radio player, Samsung/XM digital audio player and XM + Napster online service will compete with the iPod and other downloading technology and devices.

We may need additional funding for our business plan and additional financing might not be available.

Although we believe we have sufficient cash and credit facilities available to fund our operations through the date on which we expect our business to begin generating positive cash flow, we may need additional financing due to future developments or changes in our business plan. In addition, our actual funding requirements could vary materially from our current estimates. If additional financing is needed, we may not be able to raise sufficient funds on favorable terms or at all. If we fail to obtain any necessary financing on a timely basis, a number of adverse effects could occur. We could default on our commitments to creditors or others and may have to seek a purchaser for our business or assets."

We're trying to predict the future. But this Data which must be filed with the SEC must be more factual than any public relations Press Release. Factual inaccuracies in these filings can be criminal offenses for the Company's Operators and Directors. To me, this just doesn't present the rosey picture you're trying to paint. Obviously, there are two very different outlooks here making any such prediction even more difficult.

You may well be right in the end, but then again, it appears that so could I.

Happy Motoring!...Jim'99

[cfos]

I'm not looking for a flame wars either, I just happen to disagree with your argument. As for citing materials and reports. If you look hard enough, you can find data to argue any point/hypothesis. Citing a report by the SEC may be valid, but it is still an appeal to authority. If I were to cite FEMA reports from the recent hurricanes in the South, would you believe all they said...? How about if it came from the President?

Laws changes just as authority. I started this post with a question regarding satellite radios and if people had installed them in Boxsters and if so, where. I did openly wonder about whether Porsche would opt for it and wondered why they hadn't offered it. I disagree with your argument and in fact was mistaken in that Porsche does offer it on the Cayenne. I did get the price quote wrong, nonetheless it is offered.

Personally, I don't care about the financial or government reports. As I said in another post, I currently subscribe, as do 4,999,999 others, to XM. Last time I checked, neither of us worked for Porsche and are not entitled to speak on their behalf as to why they do/don't offer it. We can theorize, but it really is moot.(unless you own stock) And even if satellite goes under next year, what is the lost? $300? $400? It's the experience that draws the value. Heck, if we want to go down this road, let's talk about how there won't be any gas left to run in our porsches in 40 or so years. So, rather than spend 10 or so minutes trying to find a report from an "authority" on whether gas will run out in 40 years to refute this post, let people that have satellite radios reply and answer the questions as to where they install their antennas and leave us to our faultering businesses. We can bring this back up in 10 or so years, k? Who knows, maybe next year Porsche will offer wiper blades on their headlights.

Originally Posted by cfos

I did get the price quote wrong, nonetheless it is offered.

Hey CFOS, please don't misunderstand me. I was not intending to correct you. In fact, you have the correct price for the option. I just pointed out that other options are required to have the satellite radio choice.

[cfos]

S'ok. I didn't mean anything about your comment, only I made a mistake in my estimate. My point was that Porsche, among many other car manufacturers have opted to include satellite radio in, at least, some of their models. I'm sorry if you thought I was upset -- I'm not at all.

[Perfectlap]

$900 for Satellite Radio in a Cayenne?
That's freakin ridiculous. Its already too expensive as it is. $12 is no biggie but
dropping $200 just to get started doesn't make it too apetizing. They have to find a way to get third parties to susbsidize the cost of the tuner, maybe running banner adds during the songs. More sophisticated displays like cell phones are introducing would really help in the ad department. Subsribers alone aren't going to make the bottom line any better.

A Porsche channel would very cool. I'll send Sirius an email.

If they ever got rid of Satellite radio 7 million people would burn down the country.
FM radio sucks!!!! CD's are nice but that's leads to people listening to the same dated music. For me listening to music I've never heard before is the big draw.

p.s. Howard Stern's channel ID is already up. Channels 100 and 101

[cfos]

I agree that the option is pricey, although I'm not in a situation where I will spend $80- 90k on an SUV, even IF it is a Porsche. I figure that the person who can spend that kind of money may not see another $1k or $4k as much money.

I also agree that millions of people would be upset at the loss of satellite radio. I believe it is catching on, but we just have to wait. Personally, I'd like to see a monopoly -- lik PL suggests -- one buying out the other. That way we could have all sports and howard stern.

I had Stern back on the east coast (WNBC) and for a while when I lived in NOLA. I think his show is hilarious.

[MNBoxster]

Originally Posted by cfos

I'm not looking for a flame wars either, I just happen to disagree with your argument. As for citing materials and reports. If you look hard enough, you can find data to argue any point/hypothesis. Citing a report by the SEC may be valid, but it is still an appeal to authority. If I were to cite FEMA reports from the recent hurricanes in the South, would you believe all they said...? How about if it came from the President?

Laws changes just as authority. I started this post with a question regarding satellite radios and if people had installed them in Boxsters and if so, where. I did openly wonder about whether Porsche would opt for it and wondered why they hadn't offered it. I disagree with your argument and in fact was mistaken in that Porsche does offer it on the Cayenne. I did get the price quote wrong, nonetheless it is offered.

Personally, I don't care about the financial or government reports. As I said in another post, I currently subscribe, as do 4,999,999 others, to XM. Last time I checked, neither of us worked for Porsche and are not entitled to speak on their behalf as to why they do/don't offer it. We can theorize, but it really is moot.(unless you own stock) And even if satellite goes under next year, what is the lost? $300? $400? It's the experience that draws the value. Heck, if we want to go down this road, let's talk about how there won't be any gas left to run in our porsches in 40 or so years. So, rather than spend 10 or so minutes trying to find a report from an "authority" on whether gas will run out in 40 years to refute this post, let people that have satellite radios reply and answer the questions as to where they install their antennas and leave us to our faultering businesses. We can bring this back up in 10 or so years, k? Who knows, maybe next year Porsche will offer wiper blades on their headlights.

Hi,

I think you may have misunderstood. This is XM reporting to the SEC, not the other way around. And you have to be deaf and dumb in both eyes not to see that this is a very desparate situation they have - They're losing $480 for every person they sign up! BTW, realize I am not saying that you are deaf and dumb.. You make a lot of valid points.

And it's true that if you buy a Satellite Radio and they go under, you're only out $300-$400 bucks (of course you didn't factor in the cost of a replacement Stereo you can listen to). But, from a purely financial point of view, you'd be better off buying $300-$400 worth of XM stock, at least that way, if they went under you'd be able to take it as a Tax Loss...

Happy Motoring!...Jim'99

[cfos]

MNB: Sorry about misreading your post. To be honest, it was a lot of words and I skimmed it and posted my reply.

I don't argue that the satellite companies may be in dire straits, finacially. It really isn't my problem as a consumer (not invester). It all depends on what you want to get out of it. Case in point: Recently my wife and I flew to NYC and saw Spamalot on Broadway. Tickets cost about the same as my XM set up. If XM goes under t'morrow, I may be out a few invested $$, but I am satisfied with what I got out of it.

Also, the unit I purchased was a Pioneer that can fit in the palm of my hand. It broadcasts directly through my radio and will likewise broadcast through any other radio whether it is installed in a car or a boombox, so I am not out any money nor do I need replace my car stereo. Likewise, the models in the store ads are similar to all other radios -- they offer cd players, etc. The difference is that they are also either XM or sirius compatible -- thus you don't need the hand held unit I have. The reason I bought the model I did was that I can take it from the car and bring it in the house, or go for a walk and use headphones. Also should XM go under t'morrow, I could subscribe via satellite tv or EXPN to get baseball broadcasts; however, I would lose the enjoyment of the drive while listening to the game, or taking the wife to pick up taco bell (don't ask me, it's her favorite).

[Perfectlap]

The big start up loses for Satellite radio are nothing to sneeze at but most successful companies on the Internet were running at huge loses for years until they even broke even. There's plenty of private equity out there to keep it running for several years. The fact that there may be only one player and millions of people willing to pay makes the outlook good. Sirius stock is trading at a fraction of XM. Those holding sirius stock could see their shares become XM shares and make a killing. The press of an impending monopoly could fuel a further uptick in the sock....memories of MSFT.

[MNBoxster]

Hi,

Maybe we should revive this post in 6 mos. and take the temperature again. That would give some indication of which direction it is heading.

Happy Motoring!...Jim'99

[Mr. Boone]

In response to the original question of where to mount the satellite antenna, I was wondering if one could use the built in GPS antenna located in the center of the dash board adjacent to the wind screen.... may or may not work, and the cable terminations may need some work but if the car is fitted with the antenna and you don't have the GPS system it might be worth a try. I am not even sure that Porsche fits the cars that don’t get GPS with the antenna but I think they might. Are there any electronic engineers out there that can answer this question? Are the antennas that receive location information of the same nature as the antennas capable of receiving satellite radio broadcasts? I think the idea is worth looking into. Even if the GPS antenna won’t do the trick, this may be the best location for an adequate antenna. I like satellite radio for the access it provides to additional content not available over the air. Mounting one of those hockey puck antennas anywhere on the outside of my 02 S isn't going to happen....