Monday, January 9, 2012

Sirius (SIRI) Remains a Gamble

I remember in the early part of 2011 when some young and clueless investors in Sirius XM Radio (Nasdaq: SIRI) said when the satellite radio company supassed the $2.00 a share mark it would never fall below $2.00 again. That was a failed assertion, as it has struggled to regain the $2.00 mark after plummeting to under $1.50 a share in October, 2011.

It has only recently finally climbed above $2.00 a share on some positive news, but whether or not it can sustain such numbers is highly questionable, and more than likely improbable, as it relies too much on the failure or success of the car industry at a time when numerous competitors are assaulting Sirius.

Some are already announcing that because of three quarters of profits Sirius has moved out of being a speculative company to invest in. That's far too premature of an announcement to make, especially in the weak economic environment under the Obama administration.

Sirius recently boosted prices at a time when most consumers are still jittery over the volatility and unpredictability of the economy.

Competition and the economy are the major factors to consider with Sirius, as most people are no longer loyal to a mode of delivery for their entertainment content, and Sirius has struggled to differentiate with talent and original programming in order to justify the costs of using its service.

If for some reason subscribers don't balk at the increase put in place by Sirius, and competition isn't able to make major inroads into the base, Sirius may have a decent 2012. That's a big if, and the share price is sure to remain volatile until there is more clarity in that regard.

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