AMD, Intel, Sirius & XM

In keeping with the slowness of corporate news on which to comment this month, I have several observations I will combine in today's post.

The Wall Street Journal ran an article today providing yet more evidence on how AMD continues to hustle to press its recently hard-won advantage over Intel. The latter is moving to market servers which will allow its 4-processor technology, an improvement over 'dual-core,' to be inserted into them upon the new processor technology's appearance in the coming months. Intel is lagging on this development.

Once again, AMD looks hungry, motivated and successful in a key market for their growth plans.

The Journal had a good article discussing the joint woes of Sirius and XM, the two satellite radio companies. This is looking like a business in which you may want to own the product, but you probably don't want to own the stock.

It turns out, similar to Detroit's unending financing giveaways, the two radio companies have engaged in massive teaser rates for buying and turning on their satellite units/services. Many of these plans end soon, and there is a lot of speculation that many of these subscribers won't stick. Analysts who follow the industry are now wondering if it will ever really grow out of a niche which encompasses people who follow the star talent which underpins the two radio services. They have both spent small fortunes on their on-air talent and various sports offerings, leaving them both bleeding rivers of red ink on the income statement.

Mel Karzanin is a brilliant guy, but he has to play the hand he's been dealt. It's beginning to look like this industry isn't going to be as ubiquitous as the two entrants were hoping.

As I discussed his XM service with a friend I visited over the weekend, I was very impressed with its capacity for mobile solutions. I'm not so sure, absent a need for a specific on-air personality, that I could not replicate some of the styles/stations in a fixed environment with just a PC, high-speed access, and speakers.

It continues to be an interesting product space to watch, but it's beginning to look more risky and less consistently successful in its performance, even if the latter is just about subscriber growth.

One more thought. Karzanin is a very shrewd guy. I caught him briefly on Cramer's show when I used to watch more than 30 seconds of it. Mel was pleading that it's about subscriber base growth now, and profits later, just like cable. Well, I have such respect for Karzanin that I'm frankly a little wary of him right now. His motives are suspect.

It's sort of like being on the 'other,' read 'wrong,' side of an equity deal from Goldman Sachs. Karzanin badly needs funding and time- and he's likely to say anything legal to get it. Now would not be the time I listened to his pitch for attracting equity capital.

If these companies become long-term, consistently superior total return plays, then there's plenty of time to wait and see either, or both develop into such. It looks like they have a ways to go yet before they arrive.