Is it all Doom and Gloom for Sirius XM?
The news of the Liberty bridge loan to Sirius XM radio has now been digested by the market. Not surprisingly, the mainstream media has managed to put a significant negative spin on the event. Already, talk of future bankruptcy has taken center stage and the stock has stalled.
It’s no wonder that SIRI investors are left confused and bewildered. All anyone wants is a straight answer yet the only clue given to investors has been an SEC filing which left armchair analysts like myself to figure out the meaning behind the deal. That filing did little to put investors at ease. In fact, it has made things worse as it smites current shareholders, and provides fuel for the naysayers to wreak havoc.
By now, everyone is aware that I am always willing to go out on the proverbial limb. I’ll begin with the issue of the media’s attempt at fear mongering utilizing the term bankruptcy. They are wrong. Investors in Sirius XM have become much more sophisticated in recent months. One important lesson has been that Sirius XM bonds dictate the price of the common stock. Several months ago, S&P and Moody’s both downgraded Sirius XM due in large part to its 2009 debt obligations, and the stock retreated to record lows.
The recent upgrades by Moody’s and S&P would dictate that bankruptcy at this point is in fact off the table. The media was quick to point out the downgrades, yet these same “news” agencies conveniently overlook the upgrades. If Liberty’s John Malone was seeking to get in front of other bondholders in the event of a future bankruptcy as some have suggested, the bonds would not have been upgraded.
No one has considered that the company is on the cusp of becoming free cash flow positive in 2009. That lower car sales in many cases benefits Sirius XM, and that the company has significantly reduced operating costs since the merger. If the company can achieve its 2009 goals, this bridge loan will in fact be beneficial to Sirius XM.
There are positives to look for going forward. One is NiceMac’s USirius StarPlayer application for the iPhone, which could be approved in the coming weeks. 2009 should bring with it news that Sirius XM has extended its service to Puerto Rico and worldwide on the Internet. Hopefully, Sirius XM is done with backroom deals and can now focus on growing its subscriber base.
Position: Long Sirius XM
Brandon,
I agree with your article. Bankruptcy, share dilution and auto industry failure was all supposed to be the doom of satrad. We know that BK is less likely today than it was a month ago.
Sure there is going to be some dilution of shares. We all know this but doesnt the good outweigh the bad? The company is working toward finally getting cash free positive. We can all rejoice about that. The upgrades as you mentioned are being given yet as you stated the same ones so quick to say they were downgraded hasnt said a word about the upgrades.
The media is so quick to point out why this company will fail that the stock doesnt have a chance to get off the ground.
Something also worth talking about other than Nicemacs app and the availabilty in other locations is the used auto car market.
I seen an article the other day saying that while the new car market is sinking ( we all knew that was the case) The used car market was booming. That being said we know alot of used cars already are satrad ready so this is going to no doubt pick up a sub or two.
I really think its time that the street and market stop beating this stock to death, Look over the wall they seem to stand behind and lastly stop asking what ifs and start looking at the positive things this company has coming in the near future.
any word on Q4 08 earnings and conf call?
With the 4Q incorporated in a 10K filing, and given the value of their Public Float, they have 75 days from EOY to file their report The company still hasn’t press released a date yet. Here’s a link of their SEC requirement…
http://www.sec.gov/answers/for.....m10k.htm
I wanted to provide a correction to my above statement. I based Sirius Xm’s “Filer Status” on their EOY Public Float. Upon further review, thanks to FoolNHisMoney, Public Float value is based on a company’s SP at end of the 2nd Q, Making both Sirius and XM at the time qualify as Large Accelerated Filers, with a requirement to File their now combined 10K within 60 Days of close of their 4Q (EOY). With March 1, being the 60th day, I would expect a notice of reporting on Friday, possibly after hours, for a Monday CC, or an SEC filing for extension on Friday the 28th. In checking the combined 3Q SEC 10Q, Filed in Nov 08, the cover page confirms them filing as a Large Accelerated Filer. This also now coincides with Mel saying they would have their debt restructuring plan in place for 2009 by May 1st.
sorry that March 1st
The biggest problem that Sirius XM faces is the unending criticism and attacks that it faces from the internet media. The stock prices react to the negative headlines and stories more than the good news about the company.
To me Sirius is a winner if you plan to hold for a while. The media is just spreading fear trying to hold on to the consumers that are wanting those old formats less and less. Don’t bet against the technology, you’re sure to lose. Buy it now, it will be laughable when you look back in the years to come at the pocket change that you got it for. Sirius isn’t going away.
i just wish this company would be more media friendly as the silence is deafening–How about some good PR> Nothing on 4q conference–Why do i have the feeling something is being worked on as we speak regarding investment into sirius?
cause u are desperate like the rest of us to hope that one day it all works out. Kinda like the woman who keeps saying its ok he loves me it will get better
Thank you for this article I for one am sick of all the negativity spued about sirius.
lol
Thanks Brandon, once again, for your insights. They are a breath of fresh air!
Regarding all this talk of dilution – I don’t see it happening, at least not with the shares Malone will be issued.
It would seem that Malone will hold onto Sirius XM stock for awhile, whether in the form of the preferred shares he will be issued (assuming completion of the next round of financing) or common shares if he converts the preferred.
Why would he jeopardize the future of Sirius XM by dumping a whole lot of shares into the marketplace if he has any desire to be repaid the money (plus interest) he is loaning Sirius XM? Not only that, if he has any faith in the future of Sirius XM (and I would think he has), why wouldn’t he wait for the stock price to appreciate before selling his shares?
By the way, all of the above assumes that he has an intention of selling his shares. On that note, if he ever wants to “control” the company, why would he sell off shares, thus reducing his percentage ownership of the company’s outstanding shares?
I would be very surprised if Malone turns around anytime soon and sells his shares.
I just want an explaination where the 400 million dollars went from the end of Q3.
Who says that it went anywhere? Much more to the necessity of the Liberty deal than COH… Refincancing means new COH covenants… at any rate,we will all know soon enough.
I think comments by financial publications, and in “business” sections are a little like the sports sections in newspapers. Even if they don’t have anything much to say, they comment about the major teams in baseball, football, etc. just because these teams are popular.
Sirius XM is a widely traded stock, so they comment about it. It is much more dramatic sounding to say the sky is falling (or that it is possible the sky will fall). That is a much more interesting heading to an article in this world where the press often says something just to say something – without really knowing anything about what they are saying.
It’s kind of like the statement “sources close to the White House have revealed”. I used to think that meant they had some real information – until I learned that the “sources close” really meant the press briefing by the White House press secretary.
After all, you can get a lot of press out of “the sky is falling” and then follow it up with “disaster averted” and “stay tuned for updates”. It keeps people more on the hook than “all is well, so you can relax now.”
Oh well, so much for truth.
Kenster,
YOu and me both. I still want to know where the cash on hand went. To be exact it was 365 million not 400 but still it had to go somewhere. The first thing i want to look at when they do report is cash on hand.
They have to file before march 1st so they have from tuesday to friday to report. My guess is tomorrow or thursday for reporting.
I think the next conference call will tell the tale. If it is not full of real information that shows a solid cash position and a bank rollover of debt… its over. I would hope Mel is going to wrap up the rest of the issues and say he will consider selling the company if they get a good offer but they have NO debt coming due until 2011 and they have available cash to get to cash flow positive. Anything less than this and its over. I think its 50-50.
The biggest issue has been cured. 7 days ago BK was a very real possibility. Not anymore. As Kanye West put it:
“There will always be haters, that’s the way it is;
hater niggas marry hater bitches and have hater kids”
These people have been been so accustomed to “hating” on SIRI and Mel Karmazin in hopes that we would BK last week. However, to the contrary, MEL being the astute, well connected deal maker that he is came up with the bases loaded, losing by 1 run, 2 outs, man on 2nd and 3rd, 9th inning of Game 7 of the World Series and lined a double in the gap to score both runs..
These haters don’t know what else to do other than continue on with what they’ve been doing for the last 2 years… But how can you hate on “John Malone”? Please help me here… “John Malone”!!! My man has been around since Ted Turner needed help and helped him… Helped Bob Johnson start Black Entertainment Television and later sell it for billions… Now helping Mel Karmazin and SIRI…
This is a patience stock man… This is not a 3 month play… I hear alot of dudes on this site bitchin like women and none of you would be able to keep your mental sanity if you had Mel’s schedule for 72 hours… He is the best person to have at the wheel… I almost lost some serious serious $$$ 168 hours ago until Mel came through with the double in the gap…
Let’s not forget the “economic environment” we are in man… I’m not sure its a depresseion but Yo, this is more than a “recession” kid… and Mel kept us afloat and for that I’m happy and I’m grateful… at least i got a shot to get some of my cheese back.. and now with John Malone on the team… We can’t possibly go wrong…
I just keep avergaing down and sitting back and chillin’..
“I ain’t no joke.. i used to let the mic smoke .. now i slam it when done and make sure it’s broke…”
Bk helps no one. in this environment, Sirius XM is still growing subs, the upside potential is amazing. Why would anyone want to mess with that. they are on the verge of positive cash flow.
Bottom line is that its the hear and now best technology to deliver fresh music, news, sports and entertaiment content anyware.
no where to go but up.
I am frustrated with the lack of communications. they only thing I can think of is that they must be preparing some major announcements.
I love the Sirius product. The stock will rebound shortly. I think Brandon and Tyler are the best. Their articles are always useful and supported by facts. We should all thank them for doing such a great job this entire process for keeping us informed, and with usefull topics to debate.
Anyone see any significance with the SEC filings today?
I just want to make sure everyone here clicks on the above link for John Malone. This is information that I feel every Sirius investor needs to know.
Brandon-
Link did not appear.
Thanks!
Steve
Link is up in the article. Good read!
Thanks Still Sirius. I appreciate your help – I’ll read the article. Thanks!
One of the things I really hate during the negative comments is when they list all of the other free alternatives to Sirius. They keep saying like radio is still around, the ipods are everywhere, and there is online radio. Maybe they have been to busy listening to their Sirius radio to remember what actual radio is like. There is only maybe 2-3 stations in this area that any car I’ve been in that can even pick up the rock music I want to listen to. Then for every 2-3 songs I hear there is 2-3 minutes of commercials. As for online radio your only able to access that when you are online such as at your computer. Having Ipods and portable MP3 players are clearly a threat in terms of music especially with everyone dling it for free. However sirius offers much more especially with the howard stern and sports packages. I seriously feel like all of these old guys who didn’t know how to use a computer till recently and barely do anything but blog about stocks and send emails should back off. Most of them are technologically impaired.
As long as there are crappy programmers on SiriusXM, I don’t see how this company can survive. Have any of you “brains” even listened to “RawDog”,”AREA”,”Spa” or “Soul Town” they are shadows of what XM programming used to be. They gutted some of the best channels like “Willie’s Place” by firing some of the best talent and have yapping DJ’s on most of the music channels.
Just today I was in a bar and the owner had on SiriusXM’s 80’s channel and he said he was going to get rid of his business account because all the talking was distracting to his customers. That’s going on ALL OVER THE COUNTRY!!! Don’t you people have a clue or are you too damn busy with the technical details of the damn stock??
For this deteriorating product some of you want to praise Mel & his minions????
What drugs are you people on for crying out loud????
correct me if im wrong the the service siri offer’s to business is not the same to the rest of the public, they wouldnt have dj’s. Ive heard satrad in plenty of business’s unless the guy isnt actually using a business account and is using a regular account?
Recondo72,
You are so, so right! Screw with the content, like they have done and still are doing as we speak, and it’s curtains for Sirius/XM. Management seems to think that maintaining the quality of content is a trivial pursuit. There are many circumstances in the world today that are having a negative impact on satellite radio – things that Mel & co. can’t control. It’s a shame that the things they CAN CONTROL- like programming, advertising, and customer relations- they are such abysmal failures at! There is NO EXCUSE for their apathy and cavalier attitude. They need to grow a set of balls pronto, or be replaced with someone… ANYONE… who has a vision for the technologies future.
Still Here………..Not much to say, Gud 2 see some life !