Dear Mr. Berko:

In early 2000, I invested $10,000 and bought 150 shares of Sirius Satellite Radio at $62 a share. I thought that satellite radio was going to be the rage. Where did I go wrong? The stock fell below 50 cents this year and now trades at $2.50-$2.60. I want to know if you would recommend selling my shares.

It seems that my opinion of this new technology was way off-base. If you don’t think I should sell my 150 shares, would you give me some sort of price objective where I should “aim” to sell it; $4 or $5 or $6. I hope I’m not being too optimistic.

T.W., Erie, Pa.

Dear T.W.:

Sirius Satellite Radio (SIRI-$2.15) owns one of only two licenses issued by the Federal Communications Commission to operate a national satellite radio system. Using three orbiting satellites, SIRI broadcasts digital-quality sound to home and car radios throughout the United States. SIRI broadcasts 60 channels of “commercial-free” continuous music representing almost every genre such as jazz, classical, country, soul, rhythm and blues, pop, dance, big band, music from the 1940s or 1950s or 1960s, easy listening, Dixieland, etc. SIRI also broadcasts 40 channels of continuous “commercial-free” programming; national news, BBC news, National Public Radio, comedy, sports, children’s, soaps, financial, weather, C-Span, talk shows, etc.  SIRI, which exited from development stage in January 2003, has 115,000 subscribers. But its competitor XM Satellite Radio Holdings Inc. (XMSR-$21) has 940,000 subscribers. Both companies require about 2 million subscribers to break even, both have strong cash positions and both compete fiercely for the same market.

SIRI is the underdog and doesn’t seem to have the management or marketing skills to be as quick and successful as XMSR. However, SIRI and XMSR have an enormously valuable property, a public satellite broadcasting license, which in my opinion can grow exponentially in value over the coming years.

Satellite radio is the wave (no pun intended) of the future, considering the fact that so much of today’s radio content plays to the inexorable dumbing down of our American culture.

There’s a growing number of listeners who are personally affronted by the proliferation of screaming shock jocks and blowhard talk-show hosts. They are offended by 41 minutes of advertising per 60 minutes of listening time, by the constant barrage of shouting automobile commercials, by product promotions that are blatantly misleading and by overbearing, local radio personalities whose public and prurient lifestyles set unacceptable examples for impressionable listeners.

Because conventional radio does not reflect the interests of many Americans, I think satellite radio could take a huge audience from AM and FM stations, an audience who will gladly pay for quality program content.

If you can afford the risk, I would buy 2,000 shares at today’s price and 31 days later sell the 150 shares that cost you $10,000 to establish a tax loss. SIRI trades at 1.5 times book value of $1.40 a share, has 998 million shares outstanding, only 26 cents a share in debt, 56 cents a share in cash and Wall Street estimates revenues of $20 million next year with potential profitability in 2008-09.

If you are gutsy enough to hold those newly acquired 2,000 shares till then, I think there may be a pretty darn good chance they could be worth enormously more than your $2.50 a share purchase price.

SIRI has agreements with Ford, Daimler-Chrysler, BMW, Nissan and Volkswagen that “contemplate” the manufacture, sale and inclusion of Sirius radios in these cars. Sirius radios are also available through 6,000 retail locations in the United States.

Soon, I’m going to either Best Buy or Circuit City to have a satellite radio installed in my sport utility vehicle. I’m looking forward to hearing BBC News, old programs like Jack Benny, “The Shadow,” listening to jazz of the ’50s and enjoying Laurence Melchior once again.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.