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Thread: A Small Warning

  1. #11
    LIBOR/TED SPREAD is offline
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    Homer,

    You really think the savings will be $370M in 2010 with the "pass through" probably only effecting the subs that pay monthly or qtrly? That is music to my ears, I am happy to hear about this "fee". What do you think will be the risk to churn? My buddy and his wife our signed up as friend and family, they have been paying around $7 a month/each $84 yr/each $168 total per yr. With the 2 price hikes cost will be $10 month $120 yr now $240 total. They don't drive much and will be interesting to see if they still see cost worth value of service. Obviously this will effect churn but I believe NET we will be much better off with the increase price. For those that really are against the price hikes and complain will end up getting some free service and will net out to old rates but that is the minority, majority will pay the higher fee IMHO.

    Homer, why not join Tyler and Charles on SB?? We need you BIG TIME!!!!!!!!!

  2. #12
    relmor2003 is offline
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    Quote Originally Posted by homer985 View Post
    XM doesn't provide the radios to GM... GM buys them from XM suppliers.

    In return, GM gets a guarantee payment from XM (which XM has already paid for the term of the contract... but they are amortizing it monthly through the life of the contract).

    GM also gets several payments for the installation... first, they get an installation commission -- for every installed vehicle, once it is sold. Second, after the trial period is over, for those that "takeup" the service, GM gets a subscriber bounty that is paid 50% if they takeup the service and the other 50% if they continue the service past the first 30 days.

    Plus, XM has some royalties that are paid to the chipset and other manufacturers at the time the vehicle is sold as well..

    Altogether, it is believed that GM gets approximately $100 or so, for every installed car that is sold. The charge is AFTER it is sold, not when it is manufactured.

    GM also takes 50% of all revenue generated by "their" subs.

    So if GM sales go up, so do costs to XM



    -------
    Thank you for breaking it down. So if closed GM and Chrysler dealers unload their inventory, XM is going to be hit with a larger payment to GM than possible Mel accounted for. This will be offset(hopefully the street will see it this way) by the increase in sub totals. Or Mel knew all this would happen, and has allotted for it, and his 350 million at least EBITA guidance is still rock solid. I hope so.

  3. #13
    homer985 is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    Homer,

    You really think the savings will be $370M in 2010 with the "pass through" probably only effecting the subs that pay monthly or qtrly? That is music to my ears, I am happy to hear about this "fee". What do you think will be the risk to churn? My buddy and his wife our signed up as friend and family, they have been paying around $7 a month/each $84 yr/each $168 total per yr. With the 2 price hikes cost will be $10 month $120 yr now $240 total. They don't drive much and will be interesting to see if they still see cost worth value of service. Obviously this will effect churn but I believe NET we will be much better off with the increase price. For those that really are against the price hikes and complain will end up getting some free service and will net out to old rates but that is the minority, majority will pay the higher fee IMHO.

    Homer, why not join Tyler and Charles on SB?? We need you BIG TIME!!!!!!!!!
    Churn will go up... no two ways about it. Especially a $2 increase. I was contemplating canceling my second sub, because it is increasing to $8.99/month. Adding an additional $1 to it? I'm done with it.

    Sure it's a minimal amount of money to me... but I can't justify paying $10/month for a second sub that barely gets used. That's a 42% increase in less than 6 months. I have increases across a number of monthly expenses hitting me -- along with my wife now facing a forced "furlough" next month, taking more money out of pocket. And that is on top of her already taking a 5% paycut. Churn is going to go up.

    My estimates were very rough... basically 19 million subs, with 1/3 paying $1 more per month and 2/3 paying $2 per month. That calculation came to $381MM a year, but I rounded it down to $370MM. Seriously, when you add in all the other factors, it may drop it slightly more -- but not significantly.



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  4. #14
    relmor2003 is offline
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    Thats the current revenue of 2.8 million subs. So they would have to lose 2.8 million subs on this price increase, or 19 percent. As that would be ridiculous, lets say it raises self pay churn to even 5%. Still a huge addition to their bottom line. Great news. Future subs will have to pay it, and lifers can pay to avoid it. 20 new channels is at least a peace offering to longtime customers. They havent raised rates in years. All companies raise rates. I know I know, but you piss of cusumers, you forget, consumers are always pissed something or another. If the numbers dont lie, then its financially smart to do it. 20 new channels should be much bigger news. Disney... I mean come on, this content is getting amazing.... Its so much more than music...

  5. #15
    LIBOR/TED SPREAD is offline
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    Relmor,

    I love the energy from you as I too eat, sleep, and drink SIRIXM! HOWEVER there are confusion amoung US I can only imagine the cunfusion amoung the avg Joe out there.

    A. 20 channels I believe is internet ONLY
    B. Internet subs will NOT be charged the extra fee as this is sat radio ONLY
    C. I am very very nervous many subs and investors think that the Iphone app will have ALL siri content. Lots of Great content may be lost on the Iphone (internet) feed. I hope I am wrong and that Damiens article about some docking station for Iphone will allow all sat content but I will not believe until I see it.
    D. I am also afraid Homer (cant believe I am doubting him!!!) #'s may be off possibly way off. (HOPE I AM WRONG)

    Homer stats the following... "My estimates were very rough... basically 19 million subs, with 1/3 paying $1 more per month and 2/3 paying $2 per month. That calculation came to $381MM a year, but I rounded it down to $370MM. Seriously, when you add in all the other factors, it may drop it slightly more -- but not significantly"


    of the 19M subs 15M are self paying will the remaing parking lot, promo subs, non self paying (whatever you want to call them) will they also be hit with the $2 charge? Is this a "self paying" royalty fee only or will the car company's also be forced to pay during these "promotion periods"?


    Also of the 19M subs X% like myself have a life time sub. We will never see the price increase. X% will jump into longer contracts like the X% that did last qtr to push off the increase (great to cash flow and possibly churn but these subs do NOT pay the higher fee).

    X% here X% there another X% over there. What is that % based on Homer's anaylsis X% is close to zero and obviously that is not correct.

  6. #16
    TSavery is offline
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    Quote Originally Posted by relmor2003 View Post
    I didnt read your post when I already wrote mine. I assume the costs are added upon delivery, not upon activation. Am I assuming wrong? Tyler, when do the costs of this radio become a liability on their sheet? Basically, those radios in GM cars and Chrysler and Ford right now.
    Costs for OEM installs have differing aspects aspects:

    1. Cost to produce the chipset.

    2. Installation subsidy.

    These costs are booked at the time the cost is incurred. Thus, if production begins to pick up pace, sirius XM will need to produce more chipsets. They will then have to pay subsidies to the OEM's.

    It is the front end costs that will impact the bottom line. Yes, there are cars in inventory now that have already had costs accounted for. However, the company will need to accelerate production again onvce the OEM's do. This is where the costs will come in.
    Tyler Savery
    Satellite Standard Founder

  7. #17
    SiriMonkey is offline
    With the sale of Saturn to Penske and the Hummer what happens to
    the contracts with Sirius? Do the present contracts go with the sale or
    are they renegotiated? Just curious.

    Julie

  8. #18
    relmor2003 is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    Relmor,

    I love the energy from you as I too eat, sleep, and drink SIRIXM! HOWEVER there are confusion amoung US I can only imagine the cunfusion amoung the avg Joe out there.

    A. 20 channels I believe is internet ONLY
    B. Internet subs will NOT be charged the extra fee as this is sat radio ONLY
    C. I am very very nervous many subs and investors think that the Iphone app will have ALL siri content. Lots of Great content may be lost on the Iphone (internet) feed. I hope I am wrong and that Damiens article about some docking station for Iphone will allow all sat content but I will not believe until I see it.
    D. I am also afraid Homer (cant believe I am doubting him!!!) #'s may be off possibly way off. (HOPE I AM WRONG)

    Homer stats the following... "My estimates were very rough... basically 19 million subs, with 1/3 paying $1 more per month and 2/3 paying $2 per month. That calculation came to $381MM a year, but I rounded it down to $370MM. Seriously, when you add in all the other factors, it may drop it slightly more -- but not significantly"


    of the 19M subs 15M are self paying will the remaing parking lot, promo subs, non self paying (whatever you want to call them) will they also be hit with the $2 charge? Is this a "self paying" royalty fee only or will the car company's also be forced to pay during these "promotion periods"?


    Also of the 19M subs X% like myself have a life time sub. We will never see the price increase. X% will jump into longer contracts like the X% that did last qtr to push off the increase (great to cash flow and possibly churn but these subs do NOT pay the higher fee).

    X% here X% there another X% over there. What is that % based on Homer's anaylsis X% is close to zero and obviously that is not correct.
    Thanks for your reply. I said it was for internet only. I agree, I know that. Yes, I know that you cant get all the content. But if Demian is right, Iphone users can have all the channels. Of course they dont have the $2 for internet, that was why they already charge $2, so every sub, internet only or otherwise was hit with a $2 around increase. I think people will be confused, definately.

  9. #19
    LIBOR/TED SPREAD is offline
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    Confusion amoung the BEST of the best!!! TYLER & HOMER.

    Tyler explains.....
    "It is the front end costs that will impact the bottom line. Yes, there are cars in inventory now that have already had costs accounted for. However, the company will need to accelerate production again onvce the OEM's do. This is where the costs will come in."

    Homer says......
    "Altogether, it is believed that GM gets approximately $100 or so, for every installed car that is sold. The charge is AFTER it is sold, not when it is manufactured."


    This is HUGE for 2009 EBITDA, plants are shut down MANY OF THEM the inventory sitting on lots right now is where the 11M cars sold will come from (obviously some production is happening but not much vs last 5 yrs).

    HAS THE CURRENT INVENTORY OF CARS SITTING ON LOTS WITH SIRIXM INCLUDED ALREADY BEEN ACCOUNTED FOR ON THE BOOKS AGAINST EARNINGS (EXPENSE) LIKE TYLER EXPLAINS OR MUST THE CAR BE SOLD THEN BOOKED TO EARNINGS (EXPENSE) LIKE HOMER STATS.

    I BELIEVE THE ANSWER TO THIS WILL MAKE THE DIFFERENCE BETWEEN $300M EBITDA & $450M EBITDA.

    Thoughts?

  10. #20
    Big Ben is offline
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    Has anyone seen the article about Indiana state pension funds(teachers,constr,police) blocking the sale of Fiat to Chrysler? Thank god! There might be some real Americans left in this country. The rule of law must supersede the current woes whatever they may be. Point, the bond holders in all of these cases should be getting paid first and sometimes only. If the bond holders in all of the car companies get screwed by the government/obama motors, I feel this will have very long lasting negative affects on our system. Rewriting contract law is something we don't want to get into. Even all the lefties on CNBC were making jokes about contracts...saying...they are not contracts there just guidelines to follow. What a fin joke.

    Out

  11. Ad Fairy Senior Member
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