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Tuesday, October 12, 2004
Market Recap
Oil retreated today and that lifted the stock markets into a minor rally off the lows of the day. The Dow was down -60 points early in the day but came back to close down only -4 points. The NASDAQ fell -3 points, and the S&P fell -2 points. After hours, the chip giant INTC missed earnings by a penny but stated they performed better than expected in growing revenue and reducing inventories. This latter news had the stock trading up after hours. YHOO, the other big cap tech stock reporting tonight, met estimates and raised their fourth quarter guidance. These two reports look rosy, and stocks are up in after hours trading. Based on this information, the markets could rally in a big way tomorrow, at least at the open. As always, be cautious, the markets lately have been zigging when they are supposed to be zagging, faking many of us out. Hopefully the market can get a head of steam going off this good news tonight instead of steam rolling us with another head fake.
SIRI - Wave of the Future?
Millions of radio listeners may be tuning out traditional FM/AM radio over the next few years. Millions of TV viewers are already tuning out the big four networks and watching cable or satellite channels for alternative programming. Millions of magazine readers are no longer buying magazines in the stores; they are finding articles to read on the internet. This has big impact on media companies in the form of lost revenues. Lost revenues mean lower income, higher Price to Earnings ratios, and as a result, falling stock prices.
SIRI and XMSR are changing the way we listen to music and talk radio. Let's start with Howard Stern. He is taking his program off the FM radio and going to satellite radio. SIRI just signed Stern to a big contract and I am sure many others will be following. Satellite radio will be big in the future, and it will eventually put traditional radio out of business. It is being installed in almost all new vehicles right at the manufacturer. All people need to do after buying vehicle is to subscribe to satellite radio. With prices of vehicles these days, who wouldn't subscribe? If you are willing to pay $40K for a car, why not pay an extra $10 a month for a subscription to your favorite music? It will happen, millions will subscribe. 98% of the people between the ages of 17 and 70 have a driver's license. All those people need cars to drive and most want to listen to something while driving. Satellite radio will take over, it will take years for this to happen of course but it will happen eventually. There are only two companies in this space, they are SIRI and XMSR. The problem with these stocks right now is that they are way over valued and trading on future prospects. Neither is profitable yet and they are highly speculative stocks. But if you believe in the concept of satellite radio, you have to own one of these two stocks. I like SIRI and the direction they are headed. I am just not wild about its market cap right now with more dilution to come with the offering of more shares soon. SIRI is a candidate for the long term portfolio. I am just waiting for a pullback to around $3.00 support. These are buy and hold stocks for your IRA or 401K. Do not watch the daily swings or you will drive yourself crazy.
Short Media?
Infiniti Broadcasting is the big loser in the Stern deal, and other big media companies will lose as well if others follow Stern. Infiniti is losing Stern and all the revenue dollars that he generated. Many people may be turned off by his style, but there is no denying that he brought home the cash. Close to $200 million a year is raked in by Howard Stern. He is a cash cow for Infinity. It is not just Howard either; many other radio programs are dumping the FM dial and going for the satellite feed. They can get greater coverage for their program and they do not have to deal with as many regulations (at least not yet).
The debates are shown on national television and the big four CBS, FOX, NBC, and ABC are taking a serious hit in revenue advertising dollars during those commercial free 90 minute spots. The number of viewers does not matter, what matters is the number of commercials that are not being shown. In a 90 minute time span, the networks would be running nearly 1/3 of that time as commercials. The average half hour sitcom is actually only around 20 minutes long. The rest of that time is filled with advertisements. The networks are loosing millions of ad dollars. It is important to show the debates, but the networks take a huge hit when they are televised. Shorting some of the media companies that lose Icons or lose advertising dollars could be something to consider. Look at the charts and see if the trend is down.
Icons are important. They help draw in viewers/listeners/readers and keep them. All those loyal fans keep ratings high and high ratings require a premium for ad dollars. If an icon is lost to a rival, most will focus on the rival's gain, and forget about the loss. We know that there are two sides to every coin and two directions on every chart. Other traditional media companies are possible short plays as more and more Icons move to satellite radio.
Many Charts Looking Good
If there seems like a high turnover on the bulletin, it is because there are so many good charts. I am finding a lot of good charts and my watch list is growing larger every day. I currently have 40 stocks on my long watch list. These are stocks in addition to the Bulletin stocks, so I am watching almost 80 stocks each day. I cannot put all of them on the bulletin so I am removing stocks that do not perform. The stocks being removed may still have good charts but they are just moving too slow for us.
OTC BB Watch List
- AOGI
- TKER
Stock charts listing
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