Karmazin Speaks At Media And Money Conference
Sirius XM radio CEO Mel Karmazin spoke at the Media and Money Conference today, and while there was no “big” news, he did express confidence in the company going forward. With everyone focused on the negative aspects of the markets, Karmazin addressed the biggest perceived weights on Sirius XM Radio and pointed out that the company still has a very viable revenue stream going forward:
DEBT
Karmazin expressed confidence that Sirius XM Radio will be able to refinance the $1 billion in debt that comes due next year. The CEO has remained steadfast in this stance, even throughout the financial crisis that has had the credit markets in turmoil. Karmazin said the company has been working closely with all debt holders.
OEM CHANNEL
Karmazin stated that he anticipates hundreds of millions in revenue from the OEM channel despite weak auto sales. Using a “low-ball” figure of car sales at 12,000,000, he noted that this would still represent 6,000,000 installations that will help generate subscriber growth.
REVENUE
Karmazin is looking for $300 to $400 million in OEM channel revenue next year. In addition, the company derives revenue from the existing subscriber base through their service. Karmazin did not place figures on how the BEST OF programming or A-La-Carte would help the bottom line.
Overall, the CEO remains steadfast and confident in the company as they approach 2009. Investors, who have been beatn up in virtually any sector may not yet express the same confidence until they see the Q3 and Q4 financials. Getting trough 2008 with a good foundation will be important not only to the street, but the company as well.
Position – Long SIRI
Finally! All morning I have heard the word “confidence” on CNN regarding the Treasury, Fed, FDIC, etc., and now it has rippled into equities. Way to go Mel!
Readers need to remember that there are Subscriber Aquisition Costs assoviated with getting that $300 to $400 million in revenue. SAC is substantial, but as the company moves forward, the scales will begin to tip with more and more “profitable” subscribers begin to outweigh the investments into new subscribers
So the waiting continues.
Hopefully Q3 holds it own, and Q4 makes money, and sometime before the end of the year the feb note, or all of them are addressed.
If that could happen we would get out of the cellar and get back to a few bucks a share.
Wonder what wrench GS will try to throw into the works?
imho
vaporgold
How does 2M subs for next year (his previous forecast) equate to 300 to 400M increase in revenue for next year. The is a big difference in the two. Anybody?
SEC needs to ban margin accounts to shorts.
I’d make it law that shorts would’ve to use their own cash and not borrow cash to short stocks.
Look at crude oil, the crooks really worked that market and we all paid at the pump.
I am a positive person but…
The euphoria of a record day yesterday and .08 pop yesterday is fading away. SIRI will be a horror for several more months until we get some valuable news released.
The shorts are at it again today minipulating. I feel another downturn is in the making for our shares. This stock value will eventually sink to .33-.35 before it bottoms out an the declining crisis is controlled.
John….
2,000,000 * 12.95 * 12 = $310,800,000
3,000,000 * 12.95 * 12 = $466,200,000
With chrysler, a sub comes with 12 months of revenue. with ford, 6 months, with gm, 3 months. Take rate of 50%
Jon
If you take the 2M subs times the price of a sub(12.95-16.95) times 12 months you get 320-380M. The problem is that we won’t get all new subs in Jan. The numbers must be prorated. Actual $ closer to 300M, unless Mel has lowballed us again. Also, these numbers are only for OEM subs. The ad revenue should be ramping up in 09 to give a significant boost to revenue/bottom line. Siri has a wide variety of new avenues that they can pursue to generate increased revenue. It will take time for them to merge the two companies and formulate a unified mission/vision and to implement the new revenue streams.
Tyler
I think your low number is closer to the actual figure that as of now we should look at.
Thanks for your continued articles. I dont always agree with everything in them, but they help to keep us informed.
Thanks for the response. I should have been more clear. Don’t they usually take in about 10 to 11 bucks a month per sub even though the sated rate is 12.95. So I was thinking more like 2M * 10.50 *12 = 252,000,000.
Either way, I guess its still not that far off.
Goldman gets more money today from government bailout…help them destroy more companies and SIRI at same time…this administration and paulson’s loyalty to goldman are a real joke.
Jon
Mels numbers also include some $ for the 16.95 total package now with Siri & XM. But your right, the numbers I used were ballpark. And could be lower than 300M. I doubt it though.
12 million cars at 50% penetration and 50% of those will eventualy subscribe given statistics we have to work with.
Making these assumptions, you get new revenue, but you have to then add retail, add certain OEM deals that subs do not get counted or get revenue until trial period is over and subscribed to, then minus your subscriber churn.
300 million in additional revenue in ’09 sounds about right since the sub count will likely be more like 2.4 million (1.2 each for Sirius & XM)
This bailout of the thieves in Wall street & at these banking institutions really pisses me off and this 10 -12% rally in the indices bothers me also, because little people got scared and got out and now it went up so fast that only big $ institutions got in on the runnup.
Now watch anyone that got in late yesterday or today will lose in the next few weeks as the horrific #’s come out from companies.
Sirius stock is setting up for another hose job when the Dow and Nasdaq get hit hard again.
Just under 40 cents is likely the absolute bottom of this stock and .52 seems like a price you can get hurt again seeing where is just was a few days back.
I’m tempted, but don’t want to get used and abused again with alot of shares & want to see .39 cents before reloading.
Although 50 cents sounds bad and it does…it still leaves a billion dollar market cap.
Did Mel say anything else? That’s it? This is exactly what he said a month ago.
Seems the lack of information is telling to me. There must be something else going on, but he’s unable to talk about it yet.
Or, on the other hand, this is it, which isn’t very exciting.
SEND A EMAIL TO THEM TOO…
Thank you for your email below in which you expressed concerns about naked short selling and reinstating the uptick rule. We are aware of significant concerns on the part of many individuals and entities about these issues and we appreciate your bringing this information to our attention.
The Office of Inspector General (OIG) has an ongoing audit into the SEC Division of Enforcement’s process for responding to complaints and referrals, including those pertaining to naked short selling. Please be advised, however, that the OIG has limited jurisdiction and lacks authority to reinstate the uptick rule or to directly enforce against naked short selling. Therefore, we have forwarded your email to both the SEC’s Division of Enforcement and Office of Investor Education and Assistance for their review. You may also contact those offices directly at [email protected] and [email protected].
Sincerely,
Natasha Dandridge
Legal Assistant
On behalf of the Office of Inspector General
of the U.S. Securities and Exchange Commission
I think everyone is interpritting Mel’s comments to mean that he is going to refinance the debt. But what he said was, “I wish the debt market wasn’t what it was,” said Karmazin. “It’s very challenging, but we’ve been talking to our debt holders and I’m confident we’ll be able to work something out.”
Why would he be talking to his debt holders if he was going to pay them off. I think he is trying to renogotiate the debt rather than pay it off.
He already said the lender due in June would extend.
Jon –
What else is Mel going to say – we’re broke and doubt we’ll get the term loans ?
He has to be as positive as can be even if he is not 100% confident or else stock will be at .15 cents.
The lenders will likely extend, but for higher interest rates which will burden their balance sheet more.
This is why massive expenses need to be cut above and beyond the 425 million they announced to account for the recession in the next 12 months.
They also have big obligations due 2011 & beyond with 2010 being a little break unless the 2009 debt gets pushed only 1 year out.
They need to somehow reneg content and OEM deals if they have an opportunity.
NFL up in 2011 I think, Stern end of 2010.
MLB is a big one also, but I think it goes through 2014.
Martha Stewart and Oprah – keep one or the other or get better terms in a few years.
Ad spending pickup by 2010 should pick up with over 22 million subs and content across both networks.
Just have to get there without re-organization 1st, so I hope Mel has a few more tricks up his sleeve.
Jim –
It’s about 1.6 billion market cap against 3.2 billion shares
SIRI close today @ .48 almost made me pull the trigger again–almost. I’ve been burned on the last three buys so I’m holding to give today’s news from Mel to sink in. Also, I would be just as happy buying fewer shares at a time on on the upside. Someday … maybe.
I meant close at .4913 above. Damn trading tool. I need an upgrade.
No, I did mean .48 … Crap, what a day. I was looking at the ask instead of last near the close. Just another day when upside — with the news this morning from Treasure, Fed, FDIC — leaves SIRI down. But that’s the market generally so I shouldn’t complain, except that this has gone on for sooooooo loooonnnnnnggggg now.
I dropped another $600 today into SIRI @.51 and finally surpassed the 10,000 shares held mark.
I was guessing we would have a run up to the .60s before heading back down and touching the .36 bottom again but now I’m thinking I pulled the trigger too early, again.
With gas prices coming down does anyone think car sales might heading back up?
Let me ask you all something. The debt that is do in 2009, was anyone not aware of this before the merger or at anytime over the past 20 months? Did this debt just appear the day the merger was approved? Did all the analysts other than Wienkes not know about when the debt was due? If they all knew, how did they come up with their stock price predictions that ranged from $4-$9 just a few months ago? What has changed since prior to the merger approval? Nothing has changed. The debt is a non-issue. This stock is being attacked by financial terrorists. This stock is being manipulated day after day. I sent IR an email with a link to a person who investigates stock manipulation. Sirius spent $180 million to merge with XM but will not spend a measly $25,000 to find out who is ****ing them.
SiriusXMinvestor..
The total debt was very public.They projected stock prices as you have written $4 to $9.
From what I can gather the two things that sent the stock COLD, was the length of time the FCC took. That 17 month stall tactic alone pushed the stock out of favor because the companies could not combine sooner and have an earlier cost savings.
The second was the MEL LOAN that he accepted to get the deal done fast as he could before the NAB could step in and get a friendly judge to stop the merger.
I think all of us question the loan move, and we all question why financing was not in place, he did have a few days to get a good loan.
If you throw in slower car sales even though the penatration rate is higher,the amount of shares outstanding, no profit produced to date,(we have had cash flow positive 4th quarters), the loan amounts, the shorting of the stock by who the F— knows, the hedge funds, cramer, motley fool, the street.com, and the ecomony in general… here we are at .48 cents
imho
vaporgold
Vaporgold. That completely sums it up for me.