By Brandon Matthews
Yesterday, Microsoft (MSFT) announced its intention to enter the business of online music streaming. There are certainly enough players in the arena today, some more dominant than others. It’s one thing to be first to market, another to be number 200 or 2000. The market is saturated with more than enough players to meet current and future demand. With royalty rates now written in stone and further litigation off the table, it makes sense that others will soon join the fray as well.
If Microsoft really wants to take advantage of the expected demand from the mobile market, they will be accomplishing nothing other than dilution of the current market, while creating a product that has nearly zero chance of substantially adding to its bottom line. While they’re at it, maybe they could throw a few google (GOOG) ads up on MSN to generate some extra revenue. What ever happened to innovation at Microsoft? I mean they cannot be “Sirius!”
In an exclusive interview with “The Telegraph”, Peter Bale, executive producer of MSN, explained that “Music is an important area for Microsoft. We are looking at launching a music streaming service imminently.” Mr. Bale goes on to state that Microsoft is “looking at how other similar businesses have structured their business models and trying to figure out what will work best for both consumer and Microsoft.”
Let’s break this down. The answer to what works best for the consumer and Microsoft is content. Exclusive content that cannot be found anywhere else. There is no point in anything else. A music jukebox service like Pandora can only go so far. Microsoft has the money. Only Sirius XM Radio (SIRI) has the content. The two companies already work together on other projects, such as the Ford (F) “SYNC” system.
Sirius XM Radio is always looking for potential suitors, and has gone so far as to offer an olive branch to Charles Ergen of DISH Network just a few months ago. If Microsoft is serious about being the best, it should consider spending some of its hoarded cash to buy the best.
Position: Long SIRI
we all wish—add Apple to that wish list too
@Gary
I have no problem with an Apple / Microsoft bidding war! How about you?
Excellent news . As I posted before Mel is in at around $6.oo out of pocket on Siri shares and he said he will not sell unless the stock price is in Double Digits.
The bidding war was in the cards and its seems to be coming soon.
We are looking at least at $10.00 per shares for Siri to sell.
MSF
What about Google.
Brandon, I am actually shocked that this has not happened already. For a company the size of Microsoft and the cash they hold it would propel them into this market, while at the same time increasing their investment overnight. Look what it has done for John Malone? They would be able to do so much with this company that Sirius Xm would not be able to do for years to come, mainly marketing. It would take away all doubt about paying back debt in the upcoming months & years, and being under the Microsoft umbrella of products would gather much more respect for the Sirius Xm brand while at the same time bringing the brand recognition to such a higher level. Best of all the stock is at a bargain price. Like Gary noted it would start a bidding war. Maybe more articles like this will wake this thought up and get it more into the mainstream and grab the attention of these companies not to let the other beat them to the punch. Because basic human nature is that if someone shows interest in buying something the comptetion starts wondering if they are missing the boat.
i have no problem with A respectable bid!
i think when they go TOTALLY cash flow positive, subs pick up and they show a few quarters on increasing positive per share earnings, you will see some companies looking at them, with a bid–I dont think that happens till mid next year, if it does
I had not thought of Microsoft buying them before but that in addition to Microsoft buying Netflix would be fricking awesome.
@Gary
By that time the stock will have already increased in value significantly. It’s a shame that companies such as MS don’t exercise enough foresight to jump on opportunities like this while they are still bargains.
The reason it isn’t happening is BECAUSE it is a great idea! When was the last time Microsquash had one?
MEL WILL WANT AT LEAST $10.00 share FOR SIRI.
Not a good thing for long shareholders.
Plus Microsoft SUCKS!!! I used to be a microsoft guy but when they screwed me over by selling me vista, and basically saying “FU” to me when I needed support, they lost me to apple forever!
If Microsoft ever bought sirius, they would completely ruin the company!!!
I totally agree. If you want to have it screwed up Microsoft is the answer.
If they wanted them, why didnt they give them a better deal than Malone? Do you think in Feb, MSFT didnt know there direction? Maybe years from now they might, but now would be weird, considering the opportunity to bail them out was bypassed for a terrible offer.
I don’t care about SIRI as a company in this context. It’s an investment. If I make a ton of cash, it was a solid investment. Naturally I want SIRI to do well as long as I’m holding, but if MS/APPL did buy for say $10… I’m out and wouldn’t look back.
@relmor2003
Actually Rel…NO! Royalty decisions were not out yet. Pandora just paved the way last week for others to enter the arena with fixd costs and zero litigation..
I love the article titles, very creative.
They should buy Liberty first they have a controlling interest in SIRIUS. But buy up a bunch of Sirius shares to kill the shorts also:-)
No matter what the deal is Mel wants at least $10.00 per share to buy Siri. If you bought in higher average down.
If Siri comes out with massive earnings look for a buyout at around $20.00 because of others bidding for the company.
Siri is focusing on earning streams to maximize growth for the company and the stock.
GO SIRI GO
Hey, Brandon!!
Very nice article……allows MSFT to not have to re-invent the wheel!!
Take advantage of FM-5 AND the Best Content on the Planet!!
Take away our debt and money issues and we give Bill and the Gang
a monopoly no one can ever surpass!!
Buy us, Bill!!
$20??? COME on!
I’m an optimist, but that is just crazy talk.
I think the carry forward tax losses over more than 2 billion would be lost in a sale of the company. It’s in SIRI’s interest to remain a stand-along company and start making a profit to take advantage of their deferred tax losses.
Hi Brandon,
Isn’t Sirius XM determined to protect its $6 billion in deferred tax assets?
Wouldn’t a MSFT buyout wipe out these assets?
Neal…….thank you!! Great Post and I too am surprised that
we have not seen this happen yet……by either MSFT or APPLE!!
Well thought out comments…..Keep it up!!
Mark Harris@Neal Barkett
With all this pumping, I sense a giveback of another 20% soon.
Mr $ 10 or $ 20/ share is obviously clueless to the share count. $ 1.50 would be alot on a buyout.
Boy I thought I’ve seen the dumbest of the dumb on other message boards but this blog takes the cake.
Obviosly you are all in above $5 and are clueless about valuation of a company. How much will you pay to own something that loses $400 million a year?
$10???$20???
LMAO. When this dot-bomb collapses it will be fun watching all you squirm and complain how you got duped and were lied to.
What about Sony?
Is it possible for DTV to be considering a stock exchange of say,50 to 1 with siri ? Usually the company you least expect ,shows up out of nowhere and has already been picked by the big guys.
What’s with the picture of iTunes as the main image on here with a filename of imgname-apple_accused_of_bullying_microsoft_out_of_the_digital_music_game-50226711-images-picture-22.jpg ?
apple would be stupid to buy SIRI because they can already just use the iphone/ipod as a satellite radio. MSFT on the other hand has nearly no market share with the Zune and would more than triple their market share in online radio if they acquired SIRI.
ok esl investments nobody in there right mind is going to pay 40+ billion for siri come on 10 you are dreaming lol the debt is rediculas maybe 2.00 or 3.00 more reasonable lol and thats a pipedream sat radio is dead streeming internet /calbe the future unless you want to listen to the radio in the middle of the sahara in africa sell while you can siri is a trap that you will never want to get out of cuase you just think it will go up
No one is going to buy SIRI at 10, 5, or even 2. Wake up people, .48 to .87 or maybe if your very lucky $1.35 and not a dime more. They are a failing Company in alot of ways, they are losing xm customers daily because of the extra price for the best of siri, and now that Sterns contract is up in 17 months and he is making it very clear that he is not going to resign, they are done. Mel can’t hold out for a dream. He is not that stupid.