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Thread: A Small Warning

  1. #21
    relmor2003 is offline
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    Quote Originally Posted by Big Ben View Post
    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
    Then their CEO should have just filed bk last year. He should be in jail for accepting government money, knowing full when the consequences, and the fact they could never pay it back. They didnt need government help filing bk. Any decent lawyer can handle it. Easy. Forms are online even. If the union doesnt want BK, then they should have worked for a company that made more money from 2000 to 2008. No sympathy for overpriced workers draining the American encomic system. NO sympathy for the auto worker unions either. SHould have saved their own money. What you get for trusting a large american company with your future. You should trust yourself. Instead of spending all their overpayed wages, they should have been saving,and starting their own private saving plans, with real money, like gold and silver, not paper. No sympathy. NONE. Its a nightmare the laws being violated by our government these last 2 years.

    Basically Ben, I agree with everything you say. Bondholders are the GOOD guys, not the bad guys. These people enable companies to get money no one else will give them. If people already dont want to own bonds, the government is saying I wouldnt, cause we can come in and screw you anytime we want.
    Last edited by relmor2003; 06-07-2009 at 11:21 AM.

  2. #22
    Sirius Roadkill is offline
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    ok . . 3 questions now I'm still waiting to hear the answer:

    1.) My original question about when does the renegotiated/more favorable GM deal take effect?

    2.) LIBOR/TED's question about who is right regarding when the costs are accounted for . . . either front-loaded at installation or on the backend at sale?

    3.) Julie's question about whether or not the contracts with GM survive the disposition of selected brands to new ownership?

    Anyone??

  3. #23
    john is offline
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    Quote Originally Posted by Sirius Roadkill View Post
    ok . . 3 questions now I'm still waiting to hear the answer:

    1.) My original question about when does the renegotiated/more favorable GM deal take effect?

    2.) LIBOR/TED's question about who is right regarding when the costs are accounted for . . . either front-loaded at installation or on the backend at sale?

    3.) Julie's question about whether or not the contracts with GM survive the disposition of selected brands to new ownership?

    Anyone??



    Sirius Roadkill, I'll try to take a stabe at it.


    1.) I dont think anyone knows. The contracts are held close to the chest for reasons like nobody wants anyone else to know what kind of deal the other one got.


    2.) The cost are different for each OEM. Both Tyler and homer are correct depending on which OEM you are talking about.


    3.) For the most part the contracts are the contracts weather the companies are sold to another or not. That also went for SIRI or XMSR if one or both were sold to anyone else they would have to deal with the same contract they gave GM, Ford, ect.,ect.




    P.S. homer that 50% went for the old price XMSR was getting I think when the price went up to 12.95 the 5 dollars given to GM stayed the same.
    Last edited by john; 06-08-2009 at 08:57 AM.

  4. #24
    Sirius Roadkill is offline
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    Quote Originally Posted by john View Post
    Sirius Roadkill, I'll try to take a stabe at it.


    1.) I dont think anyone knows. The contracts are held close to the chest for reasons like nobody wants anyone else to know what kind of deal the other one got.


    2.) The cost are different for each OEM. Both Tyler and homer are correct depending on with OEM you are talking about.


    3.) Fort the mopst part the contracts are the contracts weather the companies are sold to another or not. That also went for SIRI or XMSR if one or both were sold to anyone else they would have to deal with the same contract they gave GM, Ford, ect.,ect.
    ok, good. that all seems logical . . . how do you think this will play into the EBITDA estimates for '09? do you think the $350 still holds?? if not, what range would you expect?


    P.S. ok, I admit it . . . you whipped my butt on the atomic bomb debate. after you wrote what looked like a 500 word rebuttal that was longer than the original "silver lining" article I just threw in the towel (lol)

  5. #25
    john is offline
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    Quote Originally Posted by Sirius Roadkill View Post
    ok, good. that all seems logical . . . how do you think this will play into the EBITDA estimates for '09? do you think the $350 still holds?? if not, what range would you expect?


    P.S. ok, I admit it . . . you whipped my butt on the atomic bomb debate. after you wrote what looked like a 500 word rebuttal that was longer than the original "silver lining" article I just threw in the towel (lol)


    My guess is that Mel estimated the figure on the low side (like he always has tried to do before). That the 350 million is a shoe in, even if they get to 10 or 11 million, that the figure could go up if less (like 9 million) are sold/made. I would expect the figure to go up though. If you recall when Mel said this 250 to 300 million in 2009, when they first merged. I said that that figure is way low and I think it will be closer to 350 to 400 million.


    P.S. On number 3.), that is what Mel has said several times that the merger would have no effect on the contracts with each OEM. Just like before as Jaguar was in the process of being sold off, he was also asked that question on that and he said the contract is the contract the new owner will have to follow it as before. He has stated that these contracts are there to stay and anything short of renotiating them they will stay the same.
    Last edited by john; 06-07-2009 at 03:43 PM.

  6. #26
    homer985 is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    Confusion amoung the BEST of the best!!! TYLER & HOMER.
    That is because Sirius pays their subsidies at the time of manufacture; XM pays the bulk of theirs at the time of sale. This was a point of discussion Tyler and I had several years ago. Sorry I didn't clarify this... but I was speaking in terms of GM and XM, not Sirius. That is why I stated that XM pays at the time of sale. It was stated on an early XM conference call several years go. Of course, that could have changed between now and then.




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  7. #27
    homer985 is offline
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    Quote Originally Posted by john View Post
    P.S. homer that 50% went for the old price XMSR was getting I think when the price went up to 12.95 the 5 dollars given to GM stayed the same.
    Yes John, you are correct. But the difference to my calculations is not significant. Instead of losing $98MM in cashflow on GM installs in one year, they lose $91MM, in such a calculation change.

    GM installing 2.8MM/year, had XM losing $180MM in negative cashflow a year; but if the installs dropped to 1.4MM, then the negative cashflow from them would drop to $91MM (instead of my previous estimate of $98MM).



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  8. #28
    john is offline
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    homer, my correction was in response to this:



    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



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    Hey a 1.50 is a 1.50, I dont care if it is multiplied by 150,000 or 2 million, I'll take it.

  9. #29
    homer985 is offline
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    Quote Originally Posted by john View Post
    Hey a 1.50 is a 1.50, I dont care if it is multiplied by 150,000 or 2 million, I'll take it.
    Yes, I had based the revenue share on 50% of $12.95, but it's actually 50% of $9.99. My follow up point was that the difference only lowered my estimate from $98MM in negative burn to $91MM in negative burn.

    But this really does get way off the point I was originally trying to make -- and that is that GM subs are very expensive initially -- and take a couple years before they become profitable. So a drop in GM installs would be a near term positive on cashflow... and a long term negative on earnings.



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  10. #30
    relmor2003 is offline
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    Quote Originally Posted by homer985 View Post
    Yes, I had based the revenue share on 50% of $12.95, but it's actually 50% of $9.99. My follow up point was that the difference only lowered my estimate from $98MM in negative burn to $91MM in negative burn.

    But this really does get way off the point I was originally trying to make -- and that is that GM subs are very expensive initially -- and take a couple years before they become profitable. So a drop in GM installs would be a near term positive on cashflow... and a long term negative on earnings.



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    True, but only from the GM share of their earnings, not overall. If GM sales are replaced by other makers, this could even out, or end up being even long term benefitial. You know, that smarter penetration kicks in, or more cars sold with better deals for SiriusXM than GM. I know GM records the promo at time of purchase, so it wouldnt necessarily even hurt short term subs too much going forward, as dealers must unload their closed inventories, and dealers now must also clear away 09 models for 2010. This could be the perfect storm for better than expected car sales for Q3 and Q4.
    Last edited by relmor2003; 06-08-2009 at 12:58 PM.

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