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  1. MUSCLE13 is offline
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    09-16-2007, 01:24 AM #1

    Tyler - Your prediction on price?

    Well we have Cramer saying $6 if there is a merger and Merrill Lynch's price target is $6.40 if Sirius and XM get together. What's your thoughts Tyler?

    My guess is $5 on merger day and $10 by the end of 2008 as Sirius/XM hit 20 million subs in 2008 and becomes the AOL of the 90s all over again!

    If we went over $9 with a million subs and Howard mania in 2004, we should be able to hit $10 with merger mania and 20 million subs by the end of 2008.
    Last edited by MUSCLE13; 09-16-2007 at 01:41 AM.

  2. TSavery is offline
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    09-16-2007, 11:19 AM #2

    stock price

    I typically do not get into predicting stock price because there are so many variables at play.

    However, in my opinion, a lot depends on how far up these equities can get prior to a merger decision, and exactly when that decision is announced.

    We will have the quarterly calls at some point in the next 8 weeks or so, and there may be aspects of these calls that do not shine, and thus impact the equities prices.

    All of that aside, I do not see what Cramer says as impossible, but I would be a bit more conservative. This stock needs to pass the $4 point on good volume prior to anything meaningful happening in the price. If it can do that prior to the merger decision, the stock can run upon announcement (if approved). If it has not passed $4 prior to an announcement, the upward momentum will be lessened a bit as passing $4 will be seen as a milestone.

    All of this of course is only my opinion.
    Tyler Savery
    Satellite Standard Founder

  3. MUSCLE13 is offline
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    09-16-2007, 11:29 AM #3
    You know what I see as a real target milestone Tyler? Passing that 52 week high. Once it gets past that I think then you have the real momentum. Right now the 52 week high stands at $4.37.

    I am interested to see what the analysts say for free cash flow figures for the combined company in 2008 and 2009 if and when the merger is approved.

  4. Mario is offline
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    09-16-2007, 06:07 PM #4

    not so fast

    I own quite a bit of Sirius stock... enough to make a significant impact on my life... but I don't think we will be going up quite as fast as some people would like. Sure we might crack 5 or 6, but that doesn't mean we will be able to hold above that level for a significant period of time.

    I would say, just wait 5 to 10 years and then you will see that your investment will appreciate greatly, but trading for 2008 or 2009 will probably be disappointing.

    There will be fanfare as we build up to the merger, then maybe a small pop once we merge. Then the analysts (which are near useless) will come out and give strange predictions for the future....and some will insist that although the company is larger, it is still highly unprofitable. (In this they will be correct...) And the stock will go up and down on a whim, but likely we stay around the 5 dollar level for a while...

    You see, once we merge, Sirius will really just be a larger company, growing fast, but also losing a lot of money. The hard part will be integrating the companies and making the cost savings, and most importantly, making profit. Very similar to Amazon.com a few years ago. And then you have all the rest of it as well such as hardware upgrading and integrating, special one time costs.... the first years will be hard, and financially, I think the company will bleed... although Karmazin will put the best spin on things (hopefully as much as possible.)

    Eventually, once the company gets profitable, it will be seen as expensive because the P/E ratio will be through the roof... so once again analysts and the investment community will piss and moan...(but it will be growing fast...)


    Eventually, maybe 3 or 4 years out, we will get to a point where we will have sustained and growing profits AND revenue... and then the company financials will start to make sense.... and we will maybe get to a stock price in the teens.... We become a company with a certain amount of maturity and respect, and the stock price begins to reflect performance rather than analysts whims on growth predictions, expectations, estimates and forecasts.

    If you have patience and you are an investor, you will make money. If you trade day to day, you will probably make less. If you fidget with your investments too much and if you are prone to follow the hype, you're better off selling when it hits $4 or $5 and just going on vacation for a while... because you will likely lose money on this roller coaster.

  5. MUSCLE13 is offline
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    09-16-2007, 08:30 PM #5
    I disagree Mario. And I don't think PE ratios are important in media companies. I think free cash flow is. My opinion is Mel (doing something like what is it $80 billion in mergers over the years?) already has the integration plans ready to go as soon as the deal closes. Probably had them all in mind before he made the deal. And I truly believe that the combined company will be generating free cash flow relatively soon after the merger. Tyler is an expert in analyst reports. I doubt he has seen one report that has mentioned future PE instead of future cash flow. Media companies are valued on free cash flow multiples.

  6. Mario is offline
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    09-17-2007, 11:38 AM #6
    You are right that free cash flow is important, but the bottom line is always actual income. For a fast growing company like Sirius, free cash flow is a milestone, and consistent cash flow generation is what everybody is waiting for.

    There are no reports about P/E ratios because the P/E only comes with income and that only comes after the free cash flow is realized. This is how analysts work, they always ask for a little more, especially so when they have a company like Sirius where many people have lost money and the street is always pessimistic. This is not a darling anymore, this is the kind of stock that the street loves to crap on....usually those actually make good long term investments though!

    All this to say, don't expect the sentiment to just miraculously change overnight and boost the stock up. Even with the merger, there are many hurdles.

    And yes, of course Karmazin has a plan for integration, but implementing the plan will take time and likely cost money, and the results will not appear right away. I want this stock to go up as fast as possible too, but just be careful and have patience.

  7. MUSCLE13 is offline
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    09-17-2007, 12:32 PM #7
    Quote Originally Posted by Mario View Post
    You are right that free cash flow is important, but the bottom line is always actual income. For a fast growing company like Sirius, free cash flow is a milestone, and consistent cash flow generation is what everybody is waiting for.

    There are no reports about P/E ratios because the P/E only comes with income and that only comes after the free cash flow is realized. This is how analysts work, they always ask for a little more, especially so when they have a company like Sirius where many people have lost money and the street is always pessimistic. This is not a darling anymore, this is the kind of stock that the street loves to crap on....usually those actually make good long term investments though!

    All this to say, don't expect the sentiment to just miraculously change overnight and boost the stock up. Even with the merger, there are many hurdles.

    And yes, of course Karmazin has a plan for integration, but implementing the plan will take time and likely cost money, and the results will not appear right away. I want this stock to go up as fast as possible too, but just be careful and have patience.

    Every single PROFITABLE radio or pure media company on this planet is valued on a price to cash flow basis and has been by Wall Street for the last 20 years. Not PE. Go back and research media company valuations.

  8. Mario is offline
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    09-17-2007, 04:10 PM #8
    I have a degree in Finance and I've been investing for 12 years, I understand the importance of cash flow, by all means it is an important factor, but actual profits are more important. Especially in the case of Sirius (which has huge accumulated losses.)

    You can use a multiple of cash flows to get to a benchmark or as a comparison to other companies, but at this point, or at a future point, Wall Street will expect to see actual profits... I think this is a irrefutable point... or I should hope so.

    When we hit CF positive last quarter, or the one before... or both..can't remember, people were happy.. yes. But the stock didn't even react because we still had hundreds of millions in losses. (plus other uncertainties)

    Hopefully with the merger we can save on costs enough to actually sustain CF positive and achieve net income. This will be the real turning point.

  9. MUSCLE13 is offline
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    09-17-2007, 05:07 PM #9
    Quote Originally Posted by Mario View Post
    I have a degree in Finance and I've been investing for 12 years, I understand the importance of cash flow, by all means it is an important factor, but actual profits are more important. Especially in the case of Sirius (which has huge accumulated losses.)

    You can use a multiple of cash flows to get to a benchmark or as a comparison to other companies, but at this point, or at a future point, Wall Street will expect to see actual profits... I think this is a irrefutable point... or I should hope so.

    When we hit CF positive last quarter, or the one before... or both..can't remember, people were happy.. yes. But the stock didn't even react because we still had hundreds of millions in losses. (plus other uncertainties)

    Hopefully with the merger we can save on costs enough to actually sustain CF positive and achieve net income. This will be the real turning point.
    Mario - I have been following media companies as an individual investor for the good part of 2 decades now. I invested in Infinity Broadcasting in 1992. I have not seen one, NOT ONE, Wall Street media analyst report that has valued a pure media or radio company on PE Ratio. Media companies are valued on cash flow.
    Last edited by MUSCLE13; 09-17-2007 at 05:09 PM.