Place Your Bets On Sirius Satellite Radio

Sirius Satellite Radio (SIRI), a favorite stock among traders and investors, is struggling to make money and its stock price chart shows it. Born in 1994 with great expectations for satellite radio, SIRI climbed to almost $70 before its price bubble burst.

Since trading as low as 40 cents in March 2003, SIRI has been on volatile ride.

Currently the stock is in a modest upside.

What's the future of Sirius? Many investors are betting that Sirius and XM Satellite Radio (XMSR) will merge, giving the combined entity huge cost savings. But who knows if a satellite radio company can ever make money. How can it afford to keep paying big names like Howard Stern and Oprah Winfrey? Where is the revenue growth to sustain those huge pay checks?

Cost cutting can be effective in the short run, but for revenue growth and profitability to occur, satellite radio needs sustained, strong subscriber growth and that is unlikely to happen.

With free radio going strong and a host of other listening offerings available to consumers, there is plenty of serious competition for satellite radio. And, in my (RAH) opinion, much of its programming is less than compelling. Besides a few big-name personalities, live sports coverage, news and weather much of the programming is tedious and repetitive. For example, who wants to listen to the same comedy routines day after day? Why tune in to a particular sports show during the off season? And how many salad recipes do you need from Martha Stewart?

Satellite radio is a great concept, at least on paper, but its long-term viability is yet to be determined.