With the election right around the corner, I came across this interesting cartoon. I chuckled when I read it, and figured SiriusBuzz Readers may like it regardless of their politics, or favorite candidate. That being said, Who are you voting for?
Barrington analyst Jame Goss has rated Sirius XM Radio as OUTPERFORM in a note issued October 30th. The analyst feels that, “the satellite radio concept is viable and valuable, particularly as changes are made in the context of a single corporate survivor. Our bias on this stock remains positive.”
Goss does note that financial issues have generated increased scrutiny on the equity, but recognizes that the company has exchanged some February debt for common shares, and feels that this could be an indicator that Sirius XM it is close to managing the immediate February 2009 maturities.
On the May and December XM debt Goss stated, “The second issue is $350 million of XM bank debt that comes due in May. Management feels these maturities can be extended. The other $400 million of maturities are more than a year away in December of 2009. This 1.75% convertible issue can potentially be replaced with 10% fixed rate debt.”
Confirming discussion on potential delisting and rule changes, Goss stated, “The NASDAQ has temporarily waived the $1 per share trading requirement due to the financial crisis, and SIRI’s sizable market cap appears to place it in a separate category given its roughly 3 billion share base. While reverse splits are not typically a desirable option, this might be one of the rare exceptions to that rule.”
Barrington seems to bullish on the concept of SDARS without going overboard. The closing note in their report sums things up pretty well:
“Armed with improving visibility along these lines, we are reducing our target values to a new progression beginning with $0.60 based on 2009 assumptions and $2.00 based on 2010. The debate appears to have come down to an issue of survival of the company and the industry concept.”
Position - Long SIRI
This week we have a special guest on tap for SiriusBuzz Radio. Taylor of TSS-Radio will join us to share a bit about what it is to be a satellite radio retail, what he anticipates in the retail sector this year, as well as a bit about the product offerings and specials that will be happening.
This is an opportunity for SiriusBuzz Radio listeners to gain some insight into the retail channel. We always hear about how important the OEM channel is, but retail is still a big factor that can not be ignored.
The show will also feature the standard news, and discussion with callers. You can be a part of the show by calling 347-945-7995.
SiriusBuzz Radio - Bringing you the Spirit Of Satellite Radio.
Position - Long SIRI
Sometimes it is the little details that get missed. In tough economic times, getting the little things right is perhaps more important than ever. Imagine this. Being a Friday morning, and with a 70 mile drive ahead of me, I got into my car and tuned in to Howard Stern only to find that it is a replay. Knowing that I had upgraded my Sirius subscription to include the “BEST OF XM”, I quickly found my way to channel 197 which carries the Opie and Anthony show.
When I tuned in, I noticed something peculiar on the screen of my Stiletto. The Display read, “The Virus - XM 202″. For an XM subscriber, the channel number would be correct. However, as a Sirius subscriber, the O & A show comes on channel 197. Why is it that my Sirius Radio is displaying the XM channel? What sense does this make?
The latest promotion by Sirius XM Radio gives people 3 months free of the “BEST OF” programming. For those new subscribers, why confuse the issue. If a radio is a Sirius radio, it should be clear to the consumer what channel they are listening to. At a minimum, the display of radios should say, “The Virus - XM 202 - Sirius 197″
This may seem trivial to long time subscribers, but for a new subscriber, it presents confusion. The merger is confusing enough. Why add to the confusion with something can can be remedied with relative ease?
The “BEST OF” programming is new, but it is important that the little things be done correctly. Sirius XM should also consider getting the hosts of shows that can cross over to use “Sirius XM Radio” rather than simply “Sirius” or “XM” when they are doing their respective shows.
Hopefully, the company will consider implementing these simple yet important changes.
UPDATE: The other thing I have noticed is that when I listen to XM channels on Sirius, and commercials come on, the never bother to change some of them. I have heard ads and promotions for buying the BEST OF SIRIUS on my Sirius radio. Obviously, they are marketing to XM subscribers because it is an XM channel. However, they should switch out that add to Sirius radios with a revenue generating commercial. Obviously, if I am listening to the BEST OF XM on my Sirius radio, there is no need for the company to market the BEST OF programming, especially when it is geared to subscribers on the other system. Another little thing that the company needs to fix quickly.
Position: Long SIRI.
Stifel analyst Kit Springs issued a report today in which he lowered estimates in the subscriber and revenue category, but maintained a BUY rating with a price target of $1.25. Springs notes several factors in his report, but mostly ties the lowered guidance to weak auto sales. According to Spring car sales will come in at 13.5 million for the year rather than 13.8 million.
Among items that could be perceived as positive was the NPD retail sales which were not down as far as Springs anticipated. While September sales were down 7%, and quarter sales were down 10% it was a better number than the 25% down that the analyst was anticipating.
The Stifel buy rating with a target price to $1.25 is based on a 5 year DCF with 11.4% WACC and 7.6x terminal EBITDA multiple. Spring states, “100% downside seems like an increasingly likely scenario. That said, we see several multiples of upside possible should SIRI refinance successfully, potentially realistic should churn remain solid.”
Springs Notes The Following:
Delisting has been a bit of a hot topic in the satellite radio sector. For Sirius XM, that concern was alleviated because of a rule change by NASDAQ that placed delisting for companies trading under $1 on hold until January 16th of next year.
WordSpace is under $1, but that is not the driver of their potential delisting. Instead, the issue focuses on the fact that WorldSpace has filed for bankruptcy protection, and that the total assets and revenue of the company is below the $50 million dollar level.
NASDAQ has given WorldSpace until November 20th to become compliant. Odds of that happening are quite slim, and thus it would appear that the equity is headed for the pink sheets. Investors in WordSpace should exercise caution going forward, as the equity is becoming thinly traded, and there is a potential delisting about to happen.
Position - Long SIRI, No Position WRSP
It seems that whenever something good starts to happen for Sirius XM Radio, that Goldman Sach’s analyst Mark Wienkes is there to cast doubt on the situation, and in essence, hobble the equity. After trading well yesterday, Wienkes took yet another shot at Sirius XM, that at this point reminds of a classic movie scene from Misery.
For those that for some reason may not have seen the movie, the premise is that author Paul Sheldon (played by James Caan), is “rescued” from an accident by Annie who turns out to be a crazed fan (played by Kathy Bates). After bringing Sheldon back to health, Annie will not let him go, and stops at nothing to limit the progress of his health. Every time Sheldon appears to be gaining strength, Annie does something to break his will. At one point she even “hobbles” Sheldon by breaking his ankles in a manner that can only be described as gruesome. The video is not for the feint of heart, but then again, neither is the current stock price of Sirius XM Radio.
In his latest report, Wienkes moved his price target down to .25 cents, and lowered subscriber as well as revenue estimates for the company. Wienkes still sees the debt refinancing as a major issue.
Is Wienkes hobbling Sirius XM? For many it certainly seems to be the case. The timing of reports issued by the analyst has more than a few people wondering if there is some sort of agenda. Each investor will have to arrive at their own conclusion, but there is little doubt that the latest report issued by Wienkes has had an impact on the stock price.
Sirius XM Radio just boosted the BEST OF programming option by adding the full NBA line-up. Whether you subscribe to Sirius or XM, you will now have access to the full NBA schedule this season. The announcement comes just one day prior to the beginning of the 2008-2009 NBA schedule.
In an announcement from the National Basketball Association and SIRIUS XM Radio we learned toady that satellite radio will deliver live NBA games to subscribers around the country throughout the 2008-09 season. The NBA and has been involved with satellite radio since 2003, when the NBA became the first major professional sports league to provide live games on SIRIUS.
SIRIUS XM broadcasts more live NBA games than any other radio outlet. Starting with the Opening Night games tomorrow, XM listeners will have access to more than 1,000 regular season games, plus every game of the NBA Playoffs and The Finals. For most SIRIUS listeners, select NBA games will be available through the “Best of XM” programming package.
HD Radio is seeking to increase the power of their transmissions by a factor of 10. The move would enable better indoor reception of the HD signal. They lobbying for this effort has been happening over the past year and a half, and includes the National Association of Broadcasters, major broadcasting companies, as well as NPR.
According to Inside Radio, the FCC is now preparing to open a comment window on the issue. In the media sector, there is continued debate about the viability of HD Radio. In addition, HD is seeking inclusion into all satellite radio receivers.
Position: Long SIRI
Sirius XM stock has seen active trading today, and is posting impressive gains even as the Dow and other indicies are simply treading water. Whether the activity is shorts covering, or simply a technical bottom, longs invested in the stock are perhaps beginning to see a much needed boost in the stock price.
No, the price is not where people want it to be, but it is moving up, and seems to be doing so as if it was on a mission. Last week Karmazin appeared on Autoline and conducted an interview that lasted about half an hour. Many of Karmazin’s recent appearances have been well publicized and known about well in advance. People seemed to be waiting on every word, and if certain answers were not given, they were disappointed. Perhaps the appearance without the pre-announcement was part of what we needed.
Sirius XM should be conducting their Q3 2008 conference call within the next two weeks. this will be one of those times where everyone will begin to anticipate what will be said. In my opinion, the conference call will be a dissemination of the company performance, some very conservative guidance, and an overall stance that the company will be able to deal with the debt issue that awaits in 2009. The fact that the company has already started to deal with the February 2009 converts is an indication of movement on the issue.
So what exactly is behind the big gain for Sirius XM? At this point the answer is not known, but typically we will all find out soon enough. Depending on what is driving this action, we may have a good week in the satellite radio sector.
Position: Long SIRI
Previous Entries