Cramer, of course, is advocating a monopoly position so that the consumers who want these services will have to pay their ridiculously high prices. As is, there is a huge resistance, beyond the early-adopter rush. I say that honestly because the Verizon new subscriber numbers today overwhelm those of these two companies, both of which have a national franchise. This is a technology that needs to be ubiquitous in the marketplace, and the only way for that is to charge prices that are acceptable to the mass market.

It may be that, under present pricing conditions, one or both of these two operators will fail.

Sirius reported today: they say that 6 of every 10 new satellite radio subscribers are going to them, and that new subscriber acquisition costs have fallen from $165 to $131, which is still way too high for mass marketing. In any event the quarterly loss of $0.11 (net of write-off's and $0.16 with those one-time charges) was about what was expected. The quarterly revenue growth was impressive, although the new annual guidance for revenue of $615 million is less than the Street had expected.

Cramer's notion that XM Satellite is a good takeover candidate (hence a good buy) is a good one, perhaps, but why would Sirius be the right buyer?

I think a large cable or telco company like Comcast would be more appropriate. A cable operator could bundle the radio service with internet and channel packages and do subscription marketing best. They could also sub-contact it out to other cable operators who would bundle it for their subscribers.

Moreover, with regard to a Sirius " XM combo, I doubt that the communications regulators would want a monopoly operating satellite radio.

These are interesting "special situations". I wish I had more time to follow them closely.

btw, I put these stocks into the consumer discretionary category. I don't think they could be called consumer staples yet. And as start-ups that are arguably in danger of failing, I wouldn't yet put them into the Telco sector (GICS 50). Some day maybe -- after I see them make a profit.

Sirius Satellite Radio [GICS 25]
(SIRI: Yahoo Finance file)
(SIRI: StockChart chart)
(SIRI: Investertech chart)
(SIRI: ADVFN Financial Data)(SIRI: ADVFN Financial Data)

XM Satellite Radio [GICS 25]
(XMSR: Yahoo Finance file)
(XMSR: StockChart chart)
(XMSR: Investertech chart)
(XMSR: ADVFN Financial Data)(XMSR: ADVFN Financial Data)