More on Satellite Radio…

Sirius (SIRI) shares are up 20% after-hours after the company announced that Mel Karmazin, former head of Viacom, will become CEO. Increase in market cap due this development? $1 billion. Wow. Can one man really be worth that much money? Of course not, but investors are jumping on the bandwagon anyway. I just heard a projection that satellite radio will have 30 million subscribers by 2010. Once again, we can use this to try and justify a $14-$15 billion market value for SIRI and XMSR. With 30 million subs paying $10 per month, you get industry revenue of $3.6 billion. A 10% profit margin gets you net income of $360 million. So, these stocks trade at about 40 times 2010 earnings, if these assumptions prove accurate.

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