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XM Rally: Big Ado About Nothing?

Posted by: Olga Kharif on August 22, 2006

I just read the analyst report that sent XM Satellite Radio’s stock soaring 10% this morning. The analyst, Robert Peck of Bear Stearns, just upgraded the company’s stock to outperform citing the following reasons: 1.) In September, Oprah will debut on XM. 2.) Back-to-school and Christmas sales should be strong. 3.) Troubles with the Federal Communications Commission (FCC) over XM’s radios should soon be resolved.

What surprised me about this report and the market’s reaction to it is the following: The report contains no new information. We’ve long known that Oprah will star on XM come this fall. For XM, as well as for its rival Sirius, the back half of the year is always strong. And the company has publicly said that it would resolve its FCC issues within weeks. Of course, XM has said that it would reach compliance with FCC’s radio requirements back in the spring, and the company is still to get there.

Bottom line: I don’t understand why investors have gotten so excited over a report that offered hardly any new information. I’d be more excited if XM announced it’s finally in the clear with the FCC.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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