Monopolies aren’t always good

May 13th, 2008 | Filed under: Financial Markets

Who knows how much longer we have to wait to see how everything plays out between Sirius (SIRI) and XM Radio’s (XMSR), but I am starting to lose faith.

For quite some time, people were enamored with the fact that Sirius and XM Radio’s merger would be a smashing success. Other’s were complaining that the monopoly created would be bad for everybody involved.

Well I am here to tell you that, in this occasion, a monopoly doesn’t signify anything good for both SIRI and XMSR. It is already hard enough to compete with regular FM radio. So if they were to increase the cost of service, then why would that entice anymore people.

Over five years, both stocks saw tremendous growth in their value; however, as time has gone by they have begun to go downhill. Moreover, as the deal between both companies keeps getting delayed, it will only mean bad times to continue for the two.

XMSR SIRI 051008

For most people, satellite radio is one of ultimate luxury items. Most people would choose to purchase several more things, for a car nonetheless. I have XM, and it is only because I received it as a present.

Now I am not putting down the service. In fact, I think it is really good. I have never experienced any outage except when in parking garages, there are several different stations, and the sound is good; however, it isn’t something I would recommend you go out of your way to get.

Now the companies are both reporting losses quarter after quarter, and, although the services boast great talent and personalities, I just don’t see the stocks going anywhere. Also if gas prices keep rising, then more people will continue to either drop their subscription or continue to not purchase

Did I forget to mention the years this deal has been trying to go down.

Many analysts are continuing to support a buy signal on both stocks. Jim Cramer has been in love with SIRI for years now, but for me I just see it as a no go.