XM (XMSR) Prepares For Life Without Sirius (SIRI)

The rent-a-temp CEO of XM Satellite (XMSR) does not sound like a man running a company about to be merged into Sirius (SIRI)."This is a business that has never made money, and we have lost billions over the years," Nat Davis, XMSR’s acting chief said. "Given that we’ve got 8.5 million subscribers and growing, and over $1 billion in revenue, my focus will be to become a profitable company not just a high-growth company."

"This is not a slam dunk merger. This is one of those that will be controversial," he told Reuters.

Davis speaks like a man pitching to have the top job full-time. He mentioned that XM expected more than 65 percent of its gross subscriber additions to come from customers buying cars by the end of 2007, compared to the 50 percent range at the beginning of the year. Not an observation that a man with a foot out the door needs to make. But, if he has to run the operation as a standalone company, the trend is important. It means that the company’s marketing costs should be dropping.

XM and Sirius probably suffer from the disease of being engaged but not married. They spend so much time preparing for the big day that they have little time left to run the mundance chores of their lives.

Over the last two years, XM’s shares are down almost 60%. It someone does not start to operate the company in earnest and soon, those shares could go to zero.

Douglas A. McIntyre