“Sirius XM radio has dropped dramatically this year to below the $1 level.  While many have decided to write off the company into bankruptcy, the significant volume of subscribers and endless opportunities for product development make the company very attractive in the long term.  The key will be how quickly cash flows can turn positive.

Rumors are surfacing of possible sales to Microsoft or Google, and even possible partnerships with Apple.  Regardless of the merit of these rumors, the underlying potential of SIRI should not be discounted. 

So why would someone like Google or Microsoft want a satellite radio provider?  It’s not the media industry that they are interested in… think of it in terms of content delivery, and a communications framework.  The content does not have to be a form of news or entertainment, but can be more personalized and informational.  For example, prior to the merger, XM began offering live traffic updates to GPS systems built into new cars.  This is just the first step.  Don’t limit this to just TV in your car; it’s a communication framework that Google and Microsoft are interested in.  Further to that point, they already have 20 million subscribers to create new products for.

Microsoft already has an automotive division, and would be more than eager to acquire a communications layer to add to their technologies.  The opportunities for innovation here are limitless! 

I wouldn’t say to count on a sale here, but the thought just serves to underscore the potential that Sirius XM radio has.  They started off as a premium radio provider, but their technology enables them to expand into new untapped markets.  If the full value of the company is rated at about 13 billion, would translate into a value of about $4 per share.  I don’t think there would be much of a premium offered in today’s market, as most would be happy to have anything over $1 at this point.

Disclaimer:  Author has a long position in SIRI