Barrington Rates Sirius XM as Market Perform
Barrington Research issued a report on Sirius XM Radio today that highlights the recent Liberty deal, as well as the upcoming report. The firm, in light of what has transpired sees down-side as lower than before, but in light of dilution, rates the company as market perform.
REPORT EXCERPTS:
Downside Risk More Muted, but Upside Diluted; Reducing Rating
SIRI plans to release Q4/08 and full-year 2008 earnings results on March 17, 2009, with a conference call to be webcast at 7:00 a.m. CDT. Our EPS estimates are for a loss per share of $(0.06) for the quarter and $(0.23) for the year. Consensus estimates are $(0.07) and $(0.30) for the same periods, respectively.
We admittedly stayed too long with an overly optimistic investment rating on SIRI, based on our view in the later stages that management would be able to successfully refinance its debt maturities, an action that would then open the door to a potentially favorable market response to the generation of positive EBITDA following years of cash losses. The collapsing credit markets made the refinancing a challenge, bringing Sirius XM to the brink of bankruptcy. At that point, we felt the stock appeared to possess two potential contrary outcomes – a complete loss of value or substantial upside as attention shifted to profitability.
Enter John Malone. Liberty Media Corp. agreed to make an initial $530 million investment in Sirius XM that became part of a plan that effectively pushed off any impending maturities for at least a year. However, there are elements of good news and bad news for Sirius XM. On the plus side, Liberty’s agreement addressed the impending bankruptcy risk by providing $280 million of funds that took out the $172 million of maturing 2.5% convertible notes then due and owned by rival Charlie Ergen’s EchoStar/Dish. Another $250 million of loans in two stages by Liberty, plus a separate $250 million bank debt maturity extension addressed the immediate crisis. On the negative side, the second phase of the deal with Liberty involves issuance of 12.5 million of preferred stock, convertible into 40% of the SIRI common stock. Thus, bankruptcy risk is reduced, but the near-term upside appears greatly sacrificed to this dilutive element.
The Liberty loans command a rate of 15%, providing a significant near-term financial benefit to Liberty, but added costs for Sirius XM. In addition, the slowing rate of auto purchases will work against subscriber gains that have recently been very much OEM-driven. The bottom line is that while the risk of a worst-case situation has been averted, the upside is less robust and the stock valuation is significantly diluted. Therefore, a reduction to MARKET PERFORM rating is warranted.
Position: Long Sirius XM Radio
Yeah, that makes sense. Lower your rating now that the stock is down here in the pennies and the threat of bankruptcy is gone. Notice that the report does not mention the low share price or even the possibility that the dilution just might be priced in. What a bunch of clowns…
maybe another good chance for me to get more shares tomorrow. Keeping chipping away on my average. Thanks Barrington!
stilletto 2 just gave me a pepsi commercial on the ticket screen
witch prompt me to try a update.didnt need a software update since it hit the shelves now it has me doing a 2 step update the day before march 10th makes you wonder what the updates does
not to be off topic but i just did the update and it cleared up all the merged channel logos and the stiletto seems to be running smoother.just saying 11;am before the big day march 10th is a positive sign of moving forward on the basics!!!!
BASICS=QUALITY=MASS
Wow, what a friggin genius this analyst is. In other words he said nothing. Can we get paid to write that crap.
Everything said is what we already knew and the wildcard is the actual report on March 17th and the strategy, new products, new partnerships, reworking of contracts as they come due, car market stabilizing.
We can’t seem to win for nothing. Merger? MORE Dilution. Refinance 2009 debt and avoid BK? Yup. But MORE Dilution.
So this is what they are going to harp on now?
All we can do now is hope Mel uses this breathing room to SHOW quarter after quarter the true potential of the product and merger synergies.
In the meantime, like the poster mentioned above, if the bashers plus bad market succeed in bringing the stock price lower again we can take advantage and average down again.
Still a crapshoot.
I think the report will be better than most expect considering how bad the news has been. I believe Mel has been executing and they have more cash than expected. It will be nice to get the full year 10Q behind us.
Thanks for the news Tyler. Yeah, another clown anaylst going “which way did he go, which way did he go.” Who gives a rats arse about Barrington Research anyway? Not exactly a major by far. And given they are even admitting they were wrong, who would give them an ounce of cred now?? A: No one. This is just a bunch of jibberish and them thinking they actually know something when they know nothing…as they list BEAT numbers LOL. Look. SIRI controls their own fate. Like a sports team that NEEDS to win out to make the playoffs. They control their own destiny and that’s exactly how you want it. No flukes. Remember all, SIRI is a SPEC PLAY. Solid fundamentals and metrics are essential but sooner than later larger investors are going to start stroking their chin on this one, squinting their eyes and saying, “hmmmmmm.” And when the right money starts coming in, the rest of the parasites will follow and there will be as little liftoff. May take a bit for the smoke to clear from the debt deal, but time will bear this out. SIRI can move their own SP through product, marketing announcements, et al…”they don’t need no stinking analysts!” LOL. Actually I think the chick from Merrill will do us a solid. Sadly, the two false start PreMarket squeezes diluted our pop power here. Had all this just happened the one time, the first time, we would have experienced a much different kind of surge. Now, it’s on Mel and Co. to do what they do. I have faith in ’em.
sorry bad typing:
>>and there will be as little liftoff<<
meant: a little liftoff. (big difference).
As if there weren’t enough reasons to dismiss this BR drivel, here’s one more. Most analysts are waiting until AFTER the Q/K to opine on the short-term future of this company. The fact that Barrington Research (LOL) did this just before is very telling of idiocy. So look for the real players to come out at the appropriate time. Further, we have to remember also that because of my aforementioned “bad” timing of definitive debt refi news, our squeeze opps were tainted if not squandered. So now….if you’re wondering why we’re stuck, it’s because short-side covering fear is disipated and smart money is now waiting on the Q/K (though we still could drift up a bit going in). All this means is that now, our first nice pop could be upon delivering organically on the Q/K..which is a normal situation and very desireable: to get back into normal moving patterns, based on the right merit-driven news. IMVHO…
When will this BS stop? When? Will it ever?
I feel as confident as ever in Mel, as he has executed as he stated he would. Most don’t liek the silence, but this is quiet confidence.
Accomplishments:
1) Merger approved & closed (Miracle # 1)
2) Costs taken out & synergies ongoing
3) Ala carte/Best of & price hike
3) Feb hurdle/Liberty deal closed (Miracle # 2) in this horrific credit markes. We thought this may be a subject right through Sept, so take the dilution so they can concentrate on business.
Coming shortly:
1) Interoperable radio (Mirge launching shortly)
2) Internet strategy launching shortly (Iphone app)
3) Revised content deals (MLB to Sirius ?)
4) OEM strategy – deeper penetration 60% +
5) Used Car market – improve take rates
6) Renewed SXM marketing/advertising plan
Let the naysayers keep it coming, but I think Mel knows what he is doing and will continue to improve the hardware, content, cost structure, strategy and the bottom line. The OEM market should come back by the end of the year (scrap rate is much higher than cars being manufactured & this cannot continue) Advertising revenue should increase with ads across 20 million combined subs, new ways to sells ads on devices.
After waiting for all this crap to pass, how could anyone sell, especially 1 week before the CC. Hang in there, buy more if it dips and only lighten up on big bounces. Retail investors always sell at the wrong time, so don’t fall into the trap. Since we’re diluted, buy more and that resolves that issue.
You forgot…
Cross marketing with DirecTV
New Parterships
Additional unique content
Could not have said it better SXM…. The point you brought up about scrap vs production is astute.. It is absolutely true. I am still buying, and my friends think that I am nuts… so does my wife… so does my broker. When I get this type of reaction from everyone that I know, it is usually a sign that a pop is coming. No way did they lose 7 cents in Q 4, more like 3. Hang tough everyone.
so this moron analyst factors in the possibility of a little more upside with greater weight than the possibility of a total wipe-out…
both were removed and it gets a downgrade…
only in the Alice in Wonderland world of Siri analysts.
Analyst = speculation = hearsay = gossip = nonsense = bullshit.
=they and their friends buy=when you sell=don’t fall for the HYPE…………………Take a lesson from ‘our friend’ Cramer, who always says by the time analysts are all saying ‘sell’, it’s usually time to buy and Vice Versa !!
this is why i think the reverse split will occur before authorization runs out at end of year–They not only want to take out extra shares issued but also lower total number of shares outstanding as this companys total is way too high even before the Liberty help
Analyst are a breed of their own. Quick to jump on the band wagon and even quicker to jump off. Sirius Xm’s analyst rating was higher when it looked like BK was coming fast. Know that the company jumped that hurdle they either turned more toward the negative or just dropped covering Sirius Xm. They are like weatherman except they want the day to past, THEN they’ll give you their forecast. Why do we even take stock in their ratings? Their is more good info on this site than just about anywhere.
THERE is more good info on this site than just about anywhere.
Melvin is good a making money for everyone EXCEPT long-term shareholders. Can’t argue this fact.
Scenario:
We are all at the table of a large Feast. Melvin is the gracious Host. Unfortunately, shareholders are the last to sample from the ample platters being passed around the table.
Will there be leftovers? or just table scraps. Did anyone leave any room for dessert? How is the Wine holding out??
That’s my analysis.
An observation; why is it that when the market rallies, SIRI is always called lower, and often the reverse holds true.
Draland,
Answer: THE CURSE!
Maybe ‘Kaz’ should hire an Exorcist!!
Hey guys…I cannot believe that the uptick rule is making news. I would like to hear this sites ideas about how this could possibly help Sirius XM. I know many “pumpers” have been begging for the uptick rule. Looks like it will be back in about a month!
Well. Most every other stock spiked a bit on this news. SIRI stayed at .147569834323.
Anal-yst needs a good analyst and a good proctologist for a good high colonic.
How do these guys hold onto their job?
Didnt know that in this poor economy that there were any stand up philosiphizers left.
Boy this article really sapped the life out of Sirius. I think we will see some life and volume end of week or at least by Monday going into the 4QCC.
Just keep in mind guys they were the same people that had this stock as an outperform while it lost about 90 percent of its value. If what they have said in the past is any clear sign we should see the stock take off at soon 😛
Just do the oppisite of what they say and youll score
Take a lesson from ‘our friend’ Cramer, who always says by the time analysts are all saying ’sell’, it’s usually time to buy and Vice Versa !!
The problem with the stock price feels like manupulation on several fronts. There are lots of theories out there, but what else could explain this stock price, after the refinancing, and a growing subscriber base of 20 approx 20 million?
DUDE,
Volume is not even at 12 mill right now… and it’s 2:30 in the afternoon. Nobody wants to touch this pig. Even with lipstick on it. Supply vs. Demand. Supply is up (or will be up) a large amount, demand is down.
Howard Stern is an a$$hole. That’s my thought. Screw this 530 million dollar loan from Liberty. It’s great that they don’t think we’re going under…too bad our biggest “ass-et” seems to think so….The guy should have loaned the 530 million to sirius himself….received that back plus interest AND taken hold of 40% of the common share….then gone out and actually earned his money…promoting satellite radio, his show, the service etc….like he did when he was less known and built up the company himself at a HUGE rate of return….but then this “shock jock”….probably doesn’t give a rat’s a$$ or is just incapable anymore….some guys get E.D. later in life….howards holding on with a little blue pill…..that’s all.
Results are not what I had hoped. 44% conversion below a hoped for worst case 48%. Only 88,000 new subs for what is normally their best quarter is not good at all. They could easily lose 1 million subs next year.
Please, send Melvin a “Thank You” card… Don’t want to hurt his ego any more than necessary.
Actually, Hey Melvin: Time to Go!
Think Kaz’ haz’ been OK’d already by people w/a whole lot more at stake than ‘us’………….http://www.cnbc.com/id/1584023.....038;play=1
I don’t think anyone who’s ‘anyone’ in the Satellite Industry agrees that ‘Kaz’, aka Melvin is going anywhere,
Just a thought………………………
😉