JP Morgan Bullish On Sirius XM – Cost Cutting Is Paying Off In Spades
JP Morgan issued an alert this which noted Sirius XM’s better than expected performance. The firm noted, ” Sirius reported significantly better than expected 2Q results…”
Key initial takeaways according to JP Morgan:
• Sirius lost 186K subs in 2Q. We had been modeling a 371K subs loss. The company lost 301K subs on the retail side, in line with our expectation, but outperformed significantly on the OEM side, adding
123K subs, vs. our estimate of -83K. Churn was 2.0%, much better than our 2.2% forecast.
• Revenue of $608M, up 1% Y/Y. Our model had called for flat Y/Y revenue at $604M. ARPU was $10.66, 2% above our $10.47 model. Subs revenue was up 4%, while Advertising, Equipment and Other revenue were 33%, 29% and 34% lower Y/Y, respectively.
• EBITDA was $132M, vs. our $102M forecast. As a percentage of revenue, every single expense line save SAC was better than our expectation, suggesting the focus on expense cuts is paying off in spades (and on a per-sub basis, SAC was down to $57, from $61 in 1Q). The greatest leverage vs. our model was ~210 bps on the Program & Content line.
• Guidance raised. The company now expects full-year EBITDA to be in excess of $400M, up from previous $350M+ guidance. We think the stronger subs performance, as well as better-than-expected profitability
in the quarter, suggests this number should be attainable.
While JP Morgan does do significant business with Sirius XM, they are not alone in their bullish take on the conference call. Most expected a fairly neutral call that hoped for improvement going forward. Sirius XM delivered numbers better than expectations, and delivered numbers that demonstrate that their guidance and path to profits is real.
I would expect to see upgrades and positive analyst reaction to be published in the coming days.
Tyler Savery Position – Long Sirius XM Radio
Dude. This is AMAZING news. Do you realize that you are the ONLY one reporting this???
I can’t find it mentioned on the yahoo board. At Satwaves. Or Orbitcast.
Good find.
THis is HUGE. This is incredible. Thanks man.
Why is the Sirius XM news so optimistic here, yet the Wall Street Journal is reporting that Sirius’ second quarter loss increased, the subscriber count slipped and churn rose slightly?
http://online.wsj.com/article/.....l?ru=yahoo
Outside of 1 time charges they matched the street.
Sub loss was better than expected and they guided that sub losses were done
Churn improved from 2.2% to 2.0%.
Ebitda guidance was raised to over 400 million. They are already at 241 million.
Tristan28,
Are you kidding?
In today’s conference call, was there any mention as to why Howard Stern is not available on the IPHONE?
Contractural issues
Tyler is right. The WSJ as USUAL cherry picked the CC to suit their negative view of Sirius. They included the one time charges while mostly everyone else acknowledged that Sirius in fact matched the street.
Such tactics are going to be next to impossible to pull for the 3Q CC I bet. Bwa-ha-ha! 🙂
why I invited Sarah McBride to join the radio show . . I have sent her corrective emails numerous times . . she just doesn’t care about accuracy. period.
…….and it loses 5% in AH. What gives?
a few thousand shares traded late, meaningless to where it opens tomorrow.
Between this report and the President signing off tonight on the extra 2 billion, your looking at getting back over .55 tomorrow. Maybe some short covering could get it to .60 – hoping….
I know its of topic but what kind of an impact to Sirius stock could we expect if Sterns were to leave Sat Radio? I have heard that about 60% of current subs listen to his channels exclusively. What would be the likelihood of even half that many subs canceling if he were to leave in 16 months? I am long on Sirius but this does concern me a little.
60% seems high to me given what Howard has been putting out lately. He’s on vacation this week and we are once again treated with a barrage of “The Best of” shows from his glory days. Except today’s “Best of” is the same show from earlier in the week. It’s a repeat of a repeat of an 8-year old show. This is not the Revolution we were promised. I know he can do better than this.
You can spin just about any news and make it suit your side. These guys clearly have issues with SiriusXM and wouldnt speak positive of them reguardless of the news.
SiriusXm HAS CLEARLY outlined what is going on in the company and their guidance will be reached. Its took them long enough but they are finally putting this plan together.
By the first quarter of 2010 youre going to want to be holding this stock if nothing else unseen happens. It will make you some money from these current levels.
Tyler-
Is this fresh news for tomorrow or was this out on the street already today ?
I noticed you published their neutral stance on Aug 4th, but now quickly turned bullish.
News was out today, but as far as I know I am the only one who covered the report.
Personally, I am more bullish now than I was prior to the call. It would appear that jp morgan is as well.
I’m glad your glass is more than half full now !
Hey Tyler, I have posted comments a few below this one. Wonder if you could answer them for me. Longing this stock has been nerve racking to say the least. We still have a reverse split hanging over our heads. The stock just does not want to be accepted and travel higher. Short interest remains high. Why would anyone like me want to be long when SXM is the number one shorted stock. I must be crazy!
Moreover, seems like everyone is against this stock, always playing down any success that occurs with headlines that read “SXM reports bigger loss”. Im confused and concerned about the short term now.
Tyler –
On a seperate subject, could a situation like what happenned to AIG in the last few days happen with Sirius since Sirius is one of the most shorted stocks with naked shorts. Isn’t it that AIG doubled because of the nake short ruling and fear ahead of their earnings. It caused a shortage of stock and a massive move.
Just wondering if we could see a double almost overnight if the conditions are right ?
Maybe you could write something up on the subject.
For all you Einsteins out there in day-trader land:
The stock closed LOWER today!!
Mel & Co. are hawking an inferior service from what it USED TO BE!!!
How long does it take for that to sink into you people???
Guess you’ve got to keep reading the tea leaves some more and lap up everything Mel shats out.
You must have an IQ of donkey is you can’t see that they are in the middle of a very strong quarter and back half of the year.
Nab blowhard !
SXM
Don’t waste your time responding to this DH. He’s been spewing BS for months now. Disgruntled shareholder($7 sp) Now pissed that he didn’t have the balls to avg down. he’s jealous that some hear are actually making some money on SiriusXM!
still sirius:
NOT jealous one DAMN bit. Just want a SatRad service I can be proud of once more.
You & your ilk only care if you make a damn penny and the quality or the product/service is secondary.
By all means, invest all you want to. I’m not investing one damn cent aa long as Mel & his kind are running SiriusFM.
You know NOTHING about me.
Recondo
I do know you! You spew the same BS time after time after time. Your act is old and tired! Since you hate the product so much now (I love my SatRad) go the F%^k back to terrestrial since its hasn’t changed in 50 years! You are whining crybaby! By your own admission…you have lost your ass on your investment…and you want to make sure no one else makes a little money so you bash…bash…bash! Go back to yahoo…Where ya’ll can all cry in each others milk!
Its pulling back a bit after a large spike in price this week. All stocks and commodities do this. In fact, closing lower means its gaining some technical strength.
Nice touch Tyler in noting JP’s business dealings with Sirius XM (thank you) . . this is an important disclosure that other media outlets will fail to reveal . . good report by JP . . but you know my take on their conflict . . still, I am very bullish and looking-out 2Q’s
I see no reason not to buy, buy, buy. There I said it.
So, let me get this straight again……………………
We had ‘BETTER-than-Expected’ results, in an economic environment that has also reported ‘BETTER-than-Expected’ results with regards to the Job Loss Report………..
And the SHARES tank for 2-straight days??
So, what was it again that the SEC did to protect and enforce the uptick rule and naked-shorting??
so let me get this straight every quarter this year it seems we always blame our results on one time charges and it seems like every quarter we have one? and is anyone else worried about how much directors are selling shares..
If you read the transcript from yest-
CEO didnt mention FM-5 satellite to be in operation
Not a smart move =cant believe it was overlooked-
Invest relations that it isnt in service is why it wasnt mentioned
still could have been mentioned as a forward project for company
CEO comment-Placing Rosie Odonnell as a icon on sat that “will separate us from the rest…” was a bit lame
Finally Directv is allot closer to sirius than mel admits.. “we have them at an arms distance…”
I think they are but a phone call away.
comment?
DirecTV…
I think you’re right. I’ve had DirecTV since 1985 and remember when DirecTV switched from MusiChoice to XM(not SiriusXM) a number of years ago.
Anything to get it away from Mel’s control.
Tyler,
This stock was way higher when it was competing with XM. Even with good news, that SXM making positive headway, it just gets thrashed. Moreover, nobody wants to report good news about SXM. It has a good model and seems to be something that will be the future of radio. I know that internet radio is here but I have tried it and their is only music and it cuts in and out and we all know that it has to generate revenue for the long haul. That means advertising, or paid subscriptions. If they add any real content at all then they will have to generate money to pay for it.
I have been holding from July 08, and accumulating more and now hold six figure shares. I am concerned however. I read Jim Cramers recent take on the stock and he comments it should be turned over to the debtors. Dog gone, is SXM really that bad? Then I hear that Malone wants to let it deteriate and then he can buy up the assests for pennies on the dollar. And, why has’nt DTV and SXM brought some sort of news to the table about possible TV/Radio linking, or something?
Tyler, is this a good long term stock to own, or is it just going nowhere. What is your take on it?
You’re right about when there were 2 SatRad companies.
Competition keeps a company on its toes and the consumer benefits. With the current state of SiriusFM this is not the case. Decreased quality in programming, management who takes the subscriber for granted and threw the LOYAL early subscriber base under the bus,is the best in the “smoke & mirrors” game there ever has been, & increased fees to the subscriber (no matter how you cut it).
The concerns that the acquisition would result in increased cost to the subscriber and decrease in quality across the board have proven to be true.
Sorry, but the bloom is off the rose and the bush is dying. Gonna be hard for SiriusFM to really shine. Maybe impossible. Wish Ted Turner had the old fire in his belly (or a younger version of him). The only way SiriusFM is really going to shine is for someone like that to come along and take the reins.
Recondo
What you fail to realize is that both companies were dying a slow death. Without the merger both companies would have died! Period!!! In this economy…the merger was the only thing that saved them! The fees for the internet feed and the artist royalties were bleeding the companies! they had to be passed on! You better take a closer look at your internet bill, phone bill, cell phone bill, your cable bill, electric bill and so on…because they all have fees! I bet that you blog on there forums crying about them too!
Sorry Bub,
Actually, my internet,cellular & land phone charges are LESS now than they were two years ago. Must’ve been,oh,maybe that little old capitalistic chesnut called COMPETITION??? Plus I’m getting more minutes per month on my cellular phone to boot. I wouldn’t hold my breath about me bitching about those services if I were you. Thank you SO VERY much for bringing that to my attention.
Power bill? Sure its gone up and in the process of asking the state utility commission for an increase. But guess what?? Duke Power is basically a monopoly and 99.9% of the time the state commission dosen’t give them the %increase they requested(I’m sure a financial wizard like yourself knows the ancient strategy of asking double and getting half which is what you wanted in the first place).
Unless I’m mistaken, ‘ol Mel dosen’t have to go to anybody for a fee increase. He just BS’s around and he gets his way and some SiriusFM soockholders like you sing his praises.
You are terribly mistaken about me not realizing the state of both companies prior acquisition/merger. I’ve been monitoring SatRad since I became a subscriber in 2002. I knew trouble was coming. I disagreed with the way both XM and Sirius were growing too fast and playing the foolish game of one-upmanship. Being a capitalist and consumer I was opposed to the acquisition. One of our senators (“guttless” Jim DeMint) crowed about how the merger would make it more “family friendly” and a la carte service would give consumers so much more to choose from and supported the acquisition 100%. I still believe both companies should have stood on their own merits or failures. You know, “only the strongest survive” kind of thing……
I doubt that really would’ve happened though. Somebody would have come along and picked up the pieces. If you lost a bunch in the process, sorry about that. Again, being the stock wizard you are you know that if you loose sleep over a stock, you shouldn’t be in the game. Yep, I’ve lost 92.9% of my value but it wouldn’t taste near as bad if the quality of the service was what it once was. I bought that stock to demonstrate my support for SatRad in general. At the time Sirius was just cheaper that’s all. And it wasn’t a bunch of bucks anyway – mad money from a merit bonus(remember those??).
You know the “word of mouth” thing and word of mouth is that Mel & Co. are running a shitty service.
You are absolutely WRONG.
XM was most certainly on the verge of a bankruptcy but Sirius was not.
Sirius could have easily done all the cost cutting it did AFTER the merger and survived.
It was Mel’s foolish idea to push ahead with the merger when a reasonable manager would have passed on it.
The result of Mel’s lack of homework was a ride down to 5 cents per share.
Rick….
I am not a financial advisor, but I will tell you that Sirius XM is not a “major” portion of my portfolio. In my opinion there are many positives on the stock, but also many things that can hold it back. Malone has reason to want the stock to do well, but also has reason to want it to hold back. Simply stated, the upside has several hurdles, and if your goal is to make money, there are likely beeter plays out there for you. Everyone has a different situation. I have no idea whether having a share count in six figures ties up a lot of your capital or not. Everyone is in a different boat. For me, I made my money in this equity in 2005. I simply hold a core position now that I do not trade. The stock could tank, or go up substantially, and neither would change my lifestyle. Because I have that type of position, I can divorce myself from most of the emotion people get caught up in. I will not let this equity worry me.
Your right Tyler, I should not be in as much as I am. At first I thought the merger was a natural. I think nearly everyone did. But instead of going up, it went down. I listened to emotion and did not do my homework. And, when it was going down I should have cut my losses when it dropped around 20% from my original position, but did’nt. Stupid!
The temptation of owning the stock and the possible long term outcome is overwhelming. The business model makes sense, but there are no clear cut signs. You have stated that you believe there should be some positive upgrades, and I agree with you on that. Lets see if they happen before this stock gets beaten down to the low 40’s again.
Recondo72:
You are absolutely correct – Mel has reneged on practically every promise he made. He promised NO PRICE INCREASE and THE BEST RADIO ON RADIO. The son of a bitch lied, and he seems to have no shame about it. What this company has never grasped, and still does not comprehend, are the two MOST IMPORTANT realities that pertain to satellite radios success – or any companies for that matter. Namely: having a passion for the product/service and the QUALITY of it, and………. having compassion for the customer and having THEIR best interest at heart. Sure, it sounds corny as hell in the jaded, disposable, screw the next guy world we live in, but look what happens when these “golden rules” are ignored; you are seeing it with Sirius/XM’s floundering in a perpetual state of limbo.
The solution to the problem is so simple that it is almost laughable. What is it? I’m going to give it to you right now, all you bloated, overpaid, underperforming prima donna shitheads who “manage” Sirius/XM……. LISTEN TO THE FUCKING SUBSCRIBERS!!!!!
Absolutely!
Mel deserves a swift kick in the backside and needs to be shown the door.
Sorry, but look at the execution of management for an indication of where this stock is heading–numbers continually improve.
Brad:
Thats great Brad, but I’m just a little bit stressed right now. If you look at the past performance, I would argue that the numbers do, in fact, continually improve – the number 5 – as in cents – comes to mind for some reason. Don’t get me wrong; I am pulling for this company to succeed. I just wish they would be even just a tiny bit subscriber friendly, and use the subscribers advice as a gauge to improve the programming. It really isn’t asking for that much, and it’s pathetic that we even have to vie for their attention.
The problem is that NO ONE in Sirius-XM management gives two shits about the actual subscribers.
The stock is taking a beating again today and is it any wonder?
Most people in the market see SIRI for what it is; A company that always manages to snatch defeat from the jaws of victory.
SIRI management can’t get out of its own way.
God forbid they actually listened to subscriber feedback!
What would you have done differently as CEO? Please describe your stategy to get through the worst econonmy since the depression and the failing of two car companies, which is obviously Sirius’ number one source of revenue. Enlighten us and we’ll let you know if we would have invested in the management of your company.
I’m thanking my lucky stars that Mel pulled a miracle out of his ass and saved the shit-ton (for me) of money I had invested. And since the almost-demise of Sirius, the numbers have continually improved, and will continue to improve.
As for listening to the subscribers, do you think they might be trying to balance content and cost to, once again, try to make a freakin’ penny of profit for the first time in their history? The low churn might tell us that people are actually happy with the content.
That’s EASY.
The first thing I would have done would have been to abandon the STUPID idea to merge Sirius and XM when it became clear that the NAB and the FCC were going to drag their feet.
Mel continued with this foolish idea, battling upstream and WITHOUT proper financing.
This move alone nearly killed the company.
I don’t give Mel Karmazin credit for a damned thing.
He treats SIRI like his own personal play toy. He has no concern for actual customers of the servic and he most certainly doesn’t give a shit about the shareholder.
Every bit of cost cutting that came after the merger most certainly could have been done by a leaner Sirius.
Furthermore, Sirius would NOT have been burdened with the implosion of XM debt.
If you actually believe low churn is indicative of happy customers, you are a fool.
Sirius-XM CONTINUES to lose subscribers and continues to do NOTHING to improve its customer service experience.
Instead they continue to treat existing customers with disdain.
When my 3 subs expire at the end of November, I will only be keeping one.
The cost of the product versus the quality of the product makes that an EASY decision.
BahBah Booey:
First: You would have been burned at the stake if you were CEO and decided not to merge the two companies. It’s a hell of a lot easier to say now than during the merger process. And I don’t think either of these companies would be around if they hadn’t merged.
Second: What exactly are you going to listen to when you cancel your subscription?
Third: Why are you so angry? Did you lose a lot of money in the stock? Did a customer service agent piss you off? Are you just a miserable person? What?
There is absolutely NOTHING upon which you can make the claim that neither company would be around without the merger.
Sirius could have made all the costing cutting moves regardless of a merger.
If you could actually read, I said I will be canceling all but one of my subs.
I will still listen to Stern and some of the other channels but I will also listen to terrestrial radio.
I still listen because there is plenty of good content on terrestrial radio.
The difference between terrestrial and SatRad right now isn’t all that much.
The quality of SatRad programming today can’t lay claim to anything revolutionary or new.
Bah Bah–
Let’s say I give you the fact that maybe Sirius would be better off on its own. Let’s say it was a tough call and Mel made the wrong one. Given that, do you really think he walks into work each day looking for ways to screw the subscribers and shareholders. Here’s your quote:
“He has no concern for actual customers of the servic and he most certainly doesn’t give a shit about the shareholder.”
You honestly think he’s that deceitful. That his sole mission in probably his last job is to fuck over the subscribers and shareholders? Come on, man, you can’t be that cynical. What’s your real beef?
Lastly, why not cancel all your subscriptions? Is it because you do actually value the service? I’d like to see you try to live without Sirius for six months.
You may have some honest concerns, but you can’t be as irrational as you sound.
I lived without Sirius before, I can do it again.
Quite frankly, the only reason I will keep one subscription is Howard Stern.
Once Howard leaves at the end of his contract, I will drop my last subscription.
The overall quality of the programming isn’t much better than terrestrial radio at this point.
Even Stern seems to be phoning it in a lot. The constant vacations have caused me to skip several days of listening when the replays are on.
I rarely listen to any of the music channels at this point.
Mel Karamzin absolutely LIED to the Public about his intentions.
This is NOT in dispute.
He is making decisions and continues to make decisions that hurt the customer service end of Sirius-XM.
If you actually believe that Mel Karmazin has the best interests of customers and shareholders in min, you are crazy.
It’s obvious from his very actions that he view subscribers as a necessary evil.
Not once, has Mel actually come forward with ANYTHING that existing and loyal customers could hang their hat on and say, Mel values us and is willing to listen to our concerns.
The lack of communication from Sirius-XM with it’s own subscribers is shameful.
“I’ve lived without Sirius before, and I can do it again.” Ha! That’s great, man, but not very convincing. There’s no reason to subject yourself to the music and listening options out there–iPods get old fast and terrestrial has equal parts commercials and music, with much less variety. I live in San Francisco, and we have as many, if not more, terrestrial radio stations that anywhere in the country, and they still all suck. I can hardly drive to the grocery store in my wife’s car because it doesn’t have Sirius. Terrestrial radio is extremely BAD, admit it man. Plus, I like catching a little CNBC, or CNN, or some comedy, or a college basketball game, and on and on…
You may have a valid point or two, but don’t try to say terrestrial radio and Sirius are the same. You sound ridiculous.
With that said, just to confirm, you hate both the product and the company as an investment??? Are you here telling everyone they should cancel their subscription and sell their shares? Do you recommend shorting the stock? What?
The numbers DO NOT continually improve – is what I meant, just to be clear.
Yep,
You’re right. Wall Street has so much faith in SiriusFM’s “improvement” that it closed at .49 today (down ~8.7%) while rest of market closed up 113 points.
Declining subs???
Such a trivial matter…….Plus its is such a small blip anyway……
Actually it closed at 0.485 .
Your point is correct, however.
Sirius-XM continues to lose subscribers and somehow, according to all the cheerleaders, we are supposed to believe that this is a good thing.
I have to take the time out to THANK YOU Redondo72 and BahBah Wooey for allowing me to accumulate 250,000 shares of Sirius Xm and be able to play the peaks and valleys. Because of your efforts, I was able to pick up SIRI shares on the lows and then sell them on the highs. Keep it up!
Yep,
I just rounded it off because I’m not a professional day trader like a lot of posters on this site. They agonize over .01 point. No doubt they live in a different world.
I’m sure you and I would agree that since subscribers are costing SiriusFM money then if NOONE subscribed they would not have to worry about subscriber cost one bit.
Looks like that is working that way for Mel slowly but surely one percentage point at a time. But gurus on this site would rationalize his move and cheer Mel on.
Go figure………..
Let’s not forget the conspiracy and propaganda against Sirius & XM during the merger process, which took 6 months longer than it ever should have, right into the collapse of the financial system.
Does anyone think that was fair and does anyone think that the phucking testicle radio son of a bitches should get a free ride on royalties ?
I’ve never in my life seen such negative propaganda against a company in my life, not to mention false and misleading headlines and information. In addition, just a complete lack of understanding of the metrics and business model – what some of these author’s write is unbelievable.
Has the naked short selling been stopped yet against this company ?
The 3rd & 4th quarter are going to pay off big for them in subs cash flow with the big uptick in car sales driven by the gov’t program and yet it’s almost like it’s kept quiet by the media.
I believe that Malone and Mel have something up their sleeve in the coming quarters. Knowing Mel, he is extra quiet when something is brewing.
It’s not in analysts business models and it will double this stock price by February.
Last but not least, it is amazing the interest in this company and equity, even by the people who despise it and hope it fails – it is like an obsession on both sides.
2 day beating is enough, so we rebound a bit on Monday.
Good weekend all.
Sirius is losing subscribers and will continue to lsoe subscribers because they don’t know how their listeners are.
Just today Sirius played a Celtic Crush, 3 hours show, and said NOT one word why the regular host, Larry Kerwin, wasn’t hosting the show. Not one mention or explanation in 3 hours.
Now, I like Celtic music, but to listen at 6AM on the west coast, I am going to do it because I like the host. And I know that I am far from alone in this view.
Yet Sirius apparently thinks I listen because of the music. Twaddle walap to Sirius.
Next thing they’ll be trying to run Theme Time radio without a host. Good luck with that girls!!
Well now they’ve switched Larry’s show Celtic Crush to 4AM on the west coast. I’ve contacted Sirius and am on the verge of dumping their sorry arses after subscribing for many years!
Jeffrey
Risk/Reward Ratio: 10 to 1 greater upside potential than downside risk. What more do you need to know?
JPM just announced the funding of Senior Debt Securities. Seems their bullishness translates out at least to 2015.
Better to have JP Morgan bullish than not bullish.
Has JPM given any forward targets and approximate timetable for reaching those targets?
As an investor or trader there is one suggestion I would make—you must learn to live in the moment in making investment decisions just as you do in making other life decisions.
Seems the moment for bullishness may have come again.