Can Sirius Recover?

Stocks: (SIRI)(XMSR)(F)DCX)(AAPL)

News has come across the wire twice in as many days that XM Satellite Radio is in for a soft second and, perhaps, third quarter. Banc of America said they it expects the XM new subscriber count to be flat with last year. And, Bear Stearns reduced its target for new subribers from 450,000 to 295,000 for second quarter period. The investment bank was quick to point out that, with football season beginning in Q3, Sirius should have a wind at its back. It carries the NFL games and XM does not.

So, why is the Sirius stock trading precariously close to $4? With the exception of a brief dip two weeks ago, the shares in Sirius have not been this low since late 2004.

Use of radio in cars may be dropping. Gasoline prices are bound to change the amount of time people spend in cars. And, as The Motley Fool pointed out recently, Sirius has its major alliances with Ford and Chrysler, both of them now losing market share in the North American market.

But, the biggest threat to Sirius is still the fragmentation of the portable music and video player model. With Apple's huge footprint and new products coming from Sony, and even companies like LG, the need for getting music via satellite is not the same as it was when Sirius began marketing its answer to over-the-air radio.

There are too many places to get multimedia content now, and they are, for the most part, less expensive than the satellite radio product.

Sirius once traded above $60 . Now it will be lucky to stay above $4.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in the companies he writes about.