Did Sirius XM Beat The Street?
Analysts were expecting a loss of two cents per share. The company reported a loss of 7 cents per share. Was the miss this big? By accounting standards it was, but what many fail to see is that 6 cents of that 7 cent loss was attributable to a one time accounting impact of the Liberty preferred shares.
All things considered, if you were to remove the Liberty deals impact from the quarter, Sirius XM would have beat the street with a loss of only 1 cent ($50 million). This is not to say that investors should pretend that the Liberty deal does not exist. Liberty’s shares represent 40% of the company, and ignoring that fact would be a big mistake. However, if you want to gage the performance of the quarter on a stand alone and operational basis, you need to consider their performance without the Liberty deal impact.
Thus, it can be argued that Sirius XM’s cost cutting and performance beat the street. Going forward, there will not be another Liberty deal next quarter, or the quarter after that. It was a one time cost, and now it has been fully absorbed in the form of an additional 6 cent loss in Q1.
From an operational standpoint Sirius XM is demonstrating substantial cost savings across the board, and those savings look like they will continue. It is metrics associated with the costs of the business that investors need to keep an eye on, and the company seems to have the cost side well under control.
Because the merger is only two quarters into the books, and auto sales are in such a slump it is harder than usual to construct a model for how the company will perform. Sirius XM’s Mel Karmazin gave some clarity in stating that they are basing their projections on an annualized sale rate of 9 million vehicles. Understanding that the company demonstrated significant savings in the current quarter despite a poor economy, and understanding that the adjusted EBITDA guidance upward to $350 million despite the these conditions shows that perhaps the company not only beat the street in Q1, but could continue to do so.
Position – Long Sirius XM Radio
Hey Tyler ,
You say the Liberty peferred shares are negatively impacting the EPS. But as far as I can tell the shares have not been converted yet. Google finance still shows a share number under 4 billion , if we had conversion , wouldn’t there be more than 7 billion shares ? Please clear this up if you can.
Thanks,
Rob
Robert….
The shares have not been converted, but the shares do have value, and were transferred to Malone. The value of those shares nees to be accounted for.
Thanks for the clarification.
It looked like in premarket the stock was off to the races only to see it start to head south in a hurry.
Every time siriusXm performs or does what we think it should do the street pounds it somemore. I wont pretend that losing 400k in subs isnt a big deal but we all knew there would be a loss of subs in this poor economy.
SiriusXm would have beat the street by a penny as noted if not for the one time thing with liberty. No matter what happens with this company someone still offers a ya but to it.
Debt, dilution, loss of subs. They never see the clear skys for the rain.
Wonder how long before some anaylst comment on siriusXm and offer their opinions as to what they have heard?
The Sirius XM track record of losing money has been a long one.
The analysts are not going to ignore that fact nor should they.
Going forward things look very good for SiriusXm’s future.
Once SiriusXM stops posting losses the dynamics will change.When car sales rebound this year or next year look out. That is when the ground work they are laying now will really pay off.
We are still a year or two away from where we want to be unless the car market and economy goes on steroids this year.
imho
vapor
Thanks for the insight Tyler!
Imagine another company stating that in this economy sales were down less than 5%, but that their costs were way down. Although I, like others, would have preferred subscriber numbers to have gone up, being a realist, the current results were pretty damn good I think.
If an iPhone app would have been launched (starPlayr, or internal app), the sub numbers would not have been negative.
The competition beat us to the punch. (Pandora, cbs/aol, slacker, iheartradio, etc… etc…
The sub numbers ($$$) could have been up, not down, and I believe Mel missed the ball.
With that said, the iPhone app must be tied to the 3.0 OS (think subscription model) and we are 30 days, or less, away from the 3.0 OS release (I hope).
I can only hope that this is true, because if it’s not – then what the HECK have we been waiting for??
What sucked was that Frear, I think, says that we lost subs in Q1 (we all knew that would happen), but he goes on to say that the automotive crisis is going to give Q2 subs a major hit. Thanks for that one. I think he could’ve NOT said the part about Q2.
Doobz…..
Better to know the hit now than to get a surprise later. There were people projecting possible positive sub nubers this quarter that were quite suprised to see a loss of over 400,000. How do you think those people feel getting such a suprise?
We want to know the news both good and bad. It is only by understanding all of the news that we can formulate a realistic opinion
How could anyone imagine there would be positive subscriber numbers? If they lived in a bubble and were not aware of the near zero sales of new cars, and massive unemployment is all that I could imagine. The facts are that SiriusXM did a great job at reducing costs, and keeping their ass saving John Malone happy. Does anyone think that John Malone is going to forget about his money and watch Siri go down the tubes? If you do, leave the room. Malone will be grinning from ear to ear next year when things start to finally come together for the Sirius XM Merger and satellite radio in general. The satellite game was always to survive until the flow of money shifted into the other direction. If you look at the history of the company, you would notice the negative numbers slowly swinging positive. Next year is when SIRI will mushroom into a super-nova of profits. There are plenty of people sitting on a 100,000 shares or more, waiting for the big pay day. The swinging of the stock is the work of day trading.
It’s easy for us to see the silver lining of Sirius, but Wall Street is going to have to be dragged KICKING & SCREAMING before they admit to seeing the positive and start recommending Sirius as a BUY.
It’s going to be a long bumpy road fellow longs….but then…most of us are used to that by now. 🙂
Wall Street WILL wake up….but I wouldn’t hold your breath.
Long and Strong baby. Long and Strong.
Maybe it’s not Wall Street that needs to wake up. If you sold yesterday as you should have, then you’re 15% – 20% to the good. Why waste keeping all that money tied up for years in a stock that doesn’t pay a dividend and isn’t going anywhere soon? If it gets up near .50 sell again. You will get that chance to buy back.
This concept is one that seems to fly over the head of most siri shareholders. Go figure…………………
There’s always something. last year there was the merger, then the write down, then the BK, then this… NEXT WHAT ???
Bottom line, this company su..s. Unless your are trading this company is not makin’ any money to anybody. (and even if you are tradin’ the risks associated are large).
Well we already know that we will have a net sub loss for Q2. So there goes any upside for the next 3 months. Oh.. and the Chrysler deal… and probably GM will hold us back. Nevermind that the company will actually be making money….
For traders this has been a Fantastic stock since Feburuary low’s of .05 Getting in and out of the stock since it’s lows on a daily basis the ROI is probably well over 2200%. For Investors this stock still looks good especially when you consider that March 06 ( which we will not revisit) was the bottom low for all of indices and majority of stocks . Looking at the bigger picture and if you have time frame of 2 years plus then this is a good stock to be in at these prices.
Hey any more excuses for Mel out there, sunspots maybe? Ok can’t believe I’m doing this, relmor will turn over in his grave, but I have to semi-defend the company. With the monopoly, and with the heavy penetration into vehicle manufacturers, subscriber numbers are not really that important. They have enough of a steady base to make a profit, BUT their interest costs are way too high, and their content cost is too much. They don’t have enough cash to significantly increase advertising, so the only way they can get to the finish line is to increase individual subscriber revenue, or lower acquisition cost. Churn matters, but is just a function of the way you get most of your subsciptions through vehicles. It’s a range bound number that they will have to live with. Bottom line is that this has been a TERRIBLY run company that is digging it’s way out of the grave. No it’s not going to be worth $1.50 at anytime soon. Base is perhaps .40 upside .45-.50 for the near term future. If you’re looking longer than the next quarter, then you didn’t get the message that buy and hold is dead!
I sold at .57 bought back at .42 and added 32K shares on that trade…avg now.28…nice move for me today. HAPPY HAPPY HAPPY
Hope. Dammit. You have crossed over to the dark side. Nice trading hope. Kudos.
SH…Nice move, scrf good to see you posting again. Looks like we have a long wait ahead of us.
vapor
Hey Vapor. Good to see you. I’m about 30% back. It’s been some work, but beats waiting for another millennium. We seem to be in a groundhog pattern. lol. That’s the new chart of the day. Hope all is well, Vapor.
I did the same thing and added several thousand shares myself!