Mel Karmazin Leave? You Must Be Nuts!
These days, I can only imagine that writing about Satellite Radio is akin to being a sportswriter in Detroit assigned to covering the the Lions. Reality eventually settles in that hope is meaningless, and yet the season will not end for 5 more cruel weeks.
There has been very little to write about regarding Sirius XM radio lately. I have to admit that I love a good fight, and not having the FCC, NAB or the DOJ to write about has given me a case of writers block. It seems any story is written about the moment it happens by one of my fellow writers at Siriusbuzz, leaving me again searching for story ideas.
To my complete satisfaction, a new fight seems to be starting and I am all too happy to choose a side. An article was recently published by a writer calling for the ousting of Mel Karmazin as Sirius XM CEO, which lacked any real reason for such a recommendation.
For starters, it’s all about the share price. As someone with a long position in Sirius XM myself, I am none too pleased with its current severely undervalued stock price. The problem as I see it, is that far too many of the voices crying out for Mel’s dismissal have made the mistake of being overweight Sirius XM stock. In many cases I’d venture a guess that SIRI is either their only or largest position. A position that in most cases was taken on the way down, with hopes of great wealth coming with a positive merger announcement. I say too bad. These are mistakes of the investor his/herself, rather than Sirius XM management.
Have you looked at other stocks and the value losses those investors have seen this year? Have you looked at Ford and GM? How about bank stocks? (you can pick one) Not to mention Berkshire Hathaway, who’s 52 week high was $151,650.00 and now trades at a lowly $98,000.00. Google’s 52 week high of $724.80 now hovers above its 52 week low of $265.00. For those with tunnel vision who think that Sirius is in a world of its own, I can assure you everyone is hurting as a result of the overall negative market conditions and perceived recession/depression.
As for Mel & Co., the report card comes in my opinion not from the stock price but on the company’s execution of its business plan. Sirius XM continues to grow revenue, consistantly meeting or beating Wall Street estimates. They have lowered costs, received approval to a merger to monopoly (which Direct TV and DISH failed to do), and have recreated the product in such a way as to promote exceptional value to the consumer.They have done all of this under Mel Karmazin’s watch.
This in fact is the first full quarter of a combined XM and Sirius, and despite all the positive news relating to satellite radio, some people would rather create a distraction rather than let the newly formed company operate and succeed. I am forced to ask myself what a person’s motivation would be to oust a CEO before his plans could be put into place? Is terrestrial radio THAT afraid of a merged Satellite Radio company? Of course they are! So do your own research rather than rely on an unintelligent article that has little to no basis in fact.
No matter what anyone says, including Mel Karmazin, a great CEO can only run a company in the most effective way possible. No CEO dictates the price of its company’s stock. Under Mel’s command, Sirius XM continues to grow despite the worst economic environment that most of us will ever live through, which is his job and a job well done I might add.
As for the debt issues facing Sirius XM today; these were put into place long before Mel Karmazin took the helm. He is now faced with the daunting task of cleaning up someone elses mess, and appears to be on his way to doing just that. If a loss in shareholder value were the yardstick used by all companies, the world today would be without CEO’s, unless of course, they ran hedge funds.
Position: Long SIRI, F, no other mentioned companies.
Vapor,
“Mel was not making statments that this merger was in the best interest of the stockholders?
Mel was not stating the cash flow that was going to be generated from this merger was going to be great?”
With all due respect, we have seen one quarter of results so far of the merged company. Contrary to what the media wants you to look at, we beat estimates.
If anyone thinks the auto industry is going to turn around in 4 weeks, your delusional. We are in a serious mess.
Brendon,
Mel Karmazian said many times that the share price is his report card. Period. If SIRI is indeed doing as well as you indicate, then why is the share price at 17 cents? The bottom line is that long term share price will be the only way that we can judge Mel’s work. I will give it time, but stop making excuses. True many stocks are down at this time, but, then again, SIRI is posting fairly good results only to see its stock decline 95% from its high.
Tyler:
Please write an article.
Thanks.
Socal
vaporgold,
I agree with your assessment regarding Brandon’s blind faith appraisal of Mel’s performance, and his defence thereof. I had to read it over a couple of times to make sure I wasn’t dreaming – or that he wasn’t dreaming!
To try to justify Sirius/Xm’s abysmal performance by reminding us that things are tough all over is, with all due respect, letting Mel off the hook way too easy as far as I’m concerned. Certainly other companies recent misfortunes have a direct impact on satellite radio; that is obvious. The auto industry, needless to say. Quoting some of these other stock prices is irrelavent, as pertains to Sirius/Xm directly.
No matter how bad things get, people are not going to hole up in caves and become hermits. Entertainment becomes an outlet to distract oneself from the misery of life. From the stress and the drudgery of the daily grind. It becomes more of a necessity than it would be if things were all peachy keen and wonderful. I know that music, personally speaking, is a motivating and inspirational factor in my life. They say that people start to do without certain perks when discretionary income becomes limited. All I know is that my subscription to Sirius/XM will be one of the last things that I will give up, should things become even more dreadful than they already are.
Apples stock price is not .17 cents. They are still selling a shitload of I-pods, the last time I checked. What are they doing, and what do they know, that Sirius/XM doesn’t? Why isn’t the economy impacting them as much? Perhaps not the most fair comparison, but nevertheless one thing is clearly apparent – Apple knows how to market and advertise the I-pod, and has done it so well that it is now an iconic product known the world over. My neighbor doesn’t know what satellite radio is, and the only guy I know who has it is the UPS delivery dude who delivers to the shithole place I work at. Nobody at the shithole workplace has it – why would they…. they have never heard of it!!! Granted, most of them are stupid, but still!
Mel has made fundamental errors as far as I am concerned. He has made exagerated claims about the companies finances and subscription numbers. He has alienated current subscribers; a huge mistake when every subscription is precious. He has complicated the price plans/packages when he should have made them as simple as possible. He instituted this “best of” nonsense, which is a sneaky way of saying “bend over, I’m going to violate you.” Thanks for having our backs, Mel! He needs subscriptions – he should be ashamed of trying to weasel an extra $4.00 from existing subs. Bad decision. He has been a virtual recluse as far as guidance and accessibility. If we never see the guy, or hear from him, what chance is there of rallying the troops? The troops are throwing down their guns and defecting to the other side! Mel gives Mad Dog 15 million!? WTF!
Mel needs to take care of the February debt situation. He needs to keep the product distinct and superior to anything else out there – to not compromise the content. He needs to make the service appealing to all demographics. Maybe satellite radio is destined to fail; people are fickle, and there is no accounting for why one thing is popular and another isn’t. I happen to believe that satellite radio is one of the coolest things that I have ever owned. It enhances my life more than any other .43 daily investment that I know of.
My only expectation of Mel Karmazin is that he do everything in his power to maximize the potential of satellite radio, and that he be honest and sincere towards the subscribers and shareholders. I am pulling for him, for all the subscribers(and investors), and for this company to be successful. So many of us are passionate about satellite radio, and we will fight tooth and nail to help assure it’s survival.
Does Mel feel the same way?
Brandon. You and I are like fire and ice.
Google and Berkshire Hathaway, as comparisons. And you used to be in the business?
Your continued condescending attitude towards investors is uncalled for.
Maybe you should walk a mile in someone else’s
shoes sometime. Might do you some good.
The other authors beat you to the articles, cause they are actually writers.
You write like a yahoo poster. Like me. How did they agree to have you write hear.
Crfceo, is so friggen off the planet that now the debt is a non-issue. Maybe crfceo is Brandons other login???????
Egiscodr. You used to be the original thinking guy with a small investment in Sirius.
You found all the FCC docs, before anyone and you are the tech genius of the boards.
Why did you become a pumping Sirius lapdog???
I could care less if Mel said the PPS is or isn’t how he’s measured. Why? Because it’s how I measure him.
And he’s gotten a solid “F” for months now.
.17. End of Story. What a bunch of bull.
Everytime Brandon writes, I consider no longer clicking on this site………
For those of you traders.
I sold at .24. Bought at .16. Sold today at .21. Maybe we can get some of our losses back if we play the swings.
Poor Mel. Poor poor Mel. Millions in the bank and they want his head.
Share price drops 95% in one year, and they want his head.
Poor poor Mel. Poor guy.
I’ll only want his head if he takes the company private. I’m down $60k and I’d like to ride it out for the long haul.
If Mel plans to screw me over by taking the company private, youre damn right I want him fired.
If he would make it known that he won’t screw us longs over by going private, I am all for letting him stay.
Here’s the deal–Mel is a content and advertising guy–Sirius has all the content it needs to attract subscribers and I doesn’t base much of it’s income on ads. He has failed to have a unified web presence for the Co. and has failed to find creative ways to distibute his high quality content on different media. He’s a dinosaur Ad Man–I love him for it–but the Co. has outgrown its use for him…
Sirius Roadkill, Who are you kidding. The facts are that Feb. and May debt was never a issue that any anaylst or the media should have been talking about SIRIXM going bankrupt. The facts are they had enough COH at the time it was written, to take Feb. debt out. Now I could see reporters being fooled about May but not Feb., I would think they could at least do basic math. As for the analyst they should have known about the May debt. because they have been following the company metrics and know 4th Q has been were the FCF comes from. They should have been able to project from the last 3 years and seen that the combined company will have at least 200 million (I believe it is between 200 and 230+ million) in FCF this 4th Q. Which by the way would give them enough with the remaining COH to pay off May debt. That is why the debt. issue should have never been a issue. I have said many times; Feb. and May debt will not be a issue, long ago. Now even the analyst are starting to come along. The problem is the damage has already been done. That is why the debt is a issue, because of hype and not fact.
Pinball Wizard, I heard the samething buy a person who claimed to work at SIRIXM about the 3rd Q nets being negitive, well we know how that turned out dont we. I will take Mels estimate before I take yours, and even his has the company growing by 200,000 so while it is not good, it is still growth. That is something you will have a hard time hearing from another company during this time.
I’m in for the long haul on this one and am continuing to add to my position with these cheap shares. Been in it for 4 years now, and have always had intentions of holding until 2010-2011 at least.
Mel K is a reputable CEO and is doing all the right things. The debt will be taken care of and this company will be a cash cow.
What would another CEO have done? Speed up the FCC & DOJ process. Of course not. Would a different CEO talked Wallstreet into being better stewarts w/ investors money? Impossible. Maybe a different CEO could have gone to Detroit and kicked some butt? The problem is more external than internal. You can only control things u have the power to control. If any other CEO would be brought in what would they have done differently? Water down content? Being at the right place at the right time is sometimes a CEO’s major accomplishment. Well sometimes that can work in reverse. Mel Karmazen’s knowledge and reputation is a great lifeline for Sirius Xm. Anytime he’s come out w/ good reports or annoucements he gets hit over the head w/it. He’s in the midst of the perfect storm of which could not have been forcasted. Most of us have a great vision for the future of Sirius Xm. Give some feedback on what you think Mel K. should have done. I’m sure we all have better vision than Mel. I’ll bet we all have 20/20 vision in hind sight. He’s the right man at the right time.
SCRF – You speak for two of us.
john Says:
“The problem is the damage has already been done. That is why the debt is a issue, because of hype and not fact.”
Thank you for making my point that the debt “is a(an) issue.”
Now remind us all again how dropping an atomic bomb on Japanese civilians had a “silver lining.”
I think that was one of your more insightful and erudite posts from the recent past. I am sure other readers here would benefit from placing any remarks you make in their proper context.
SCRF/GIS . . . I second your remarks. Unfortunately, ill-formed opinion pieces such as this one undermine the credibility of the entire editorial staff (you deserve better Tyler).
You would now have to seriously question the motives of anyone who continues to apologize for this management teams abysmal performance . . . socal, I like Carly as well; lets get it done!
Pinball,
In a recent interview in a marketing publication (which I can’t seem to find), Sirius’ VP of Marketing indicated that the cancellation rate since the consolidation of channels has been actually lower than the company’s expectations.
If anyone can find a link to the article please post. I believe the publication was something like “take-two marketing” or something.
Brandon, let’s face facts, you’re nothing but a pumper who has been totally wrong when it came to predicting this stock’s performance. There was a reason why Redstone terminated Mel’s employment, yet you want to ignore that. Truth be told and that’s something you have trouble doing, is that Mel’s performance at the helm of Sirius has been less than satisfactory. He has done absolutely nothing to protect shareholder value and everything to put this company into serious financial turmoil. As someone else pointed out, Mel should have had the financing in place long before the FCC granted approval but he did not. Instead, he got a loan at loanshark rates, had to float more stock to raise capital and then loaned shares to some of his Wall St. buddies to sell short, driving the price that was slightly above $2 at the time, down to $1.50, which has continued to decline even further.
It is no secret that his country has been in a recession for just about a year. Karmazin had many chances to call off the acquisition of XM but did not, which has proven to be a very costly mistake. There is no doubt that Mel Karmazin is in way over his head when it comes to Sirius. If the company is forced to file for Chapter 11 bankruptcy protection, which it most likely will given the current state of the financial markets, especially the credit sector, Mel Karmazin will be replaced anyway, right along with the imcompetent board of directors.
Brandon, you obviously have little to no business managment experience, as do many of Sirius’s investors. A practical businesslike approach to handling Sirius’s serious financial problems is what’s needed here, not more of your emotional drama. There is no pot of gold waiting for Mel to tap into in order to refinance Sirius’s massive debt. In the end, it will be those debtholders who will own the company and the common shareholders will be left holding the bag, mostly due to their own failure to understand that as a shareholder in the company, the responsibility for paying Sirius’s debt falls directly on them by way of cancellation of their common shares.
My predictions are this, the reverse split will be approved, the shorts will then short it back down below $1, Sirius will not get their Hail Mary and be forced to file for Chapter 11 early next year. There is also that shareholder lawsuit that is gaining momentum. It is and will continue to cost the company money to defend against it, and the end result could just be that Mel and the board are forced out anyway.
There are many good CEO’s out there who are capable of stepping in and make a goodhearted attempt to turn this company around, but the clock is ticking and there isn’t much time left for that to happen unless Mel and the board step down now, Will they? I doubt it. What you will most likely see is a bankrupt company, shareholders left holding the bag when the common is canelled, and the never ending lawsuits that will follow because too many believed with their heart, instead of believing what has been in black and white for a very long time. I refer of course to the many 8K’s, 10K’s and 10Q’s that tell quite a different story than what blind pumpers like Brandon Matthews do.
Sirius Roadkill, as stated it was hype that took the PPS down not fact. The same gos for the PPS when it hit 9 because of Stern and Mel coming to SIRI. The intelligent ones sold because they saw it was hype and sold most as it went to that ridiculous PPS. The fact is you cant explain why anyone would say they are going bankrupt because of Feb. debt when they had the COH to take it out. By the way, that was without any financing at all. Second the converts were begging to reconvert, so worse case they get bad terms on the coverts, but nowhere should the word “bankruptcy” have appeared in any of the multitude of articles that were put out by respectible agencies. That is hype that does not follow the facts.
Now as to why dropping a atomic bomb on the Japanese civilians has a silver lining, is simple and anyone with even a little knowledge of history could figure out. (you should try switching from American Ideal to the History Channel every once in a while.) First lets remember it took two bombs not one. If that doesn’t tell you they were not even close to just giving up, nothing will. Second there was going to be a third one dropped if the military coup was successful in stopping the Emperor’s pre recording of the surrender. Third even you must know that more were killed in the conventional bombing then in both atomic bombings. This all brings me to the silver lining which is for the millions of men that would have been ordered to take the beaches and cities of Japan. That also gos double for the many millions of Japenese men, women, and yes even children that would have gladly given their lives for what they thought the Emperor wanted. Yes I say thought because that recording that I spoke of before was the first time any of them even heard his voice. So yes I would say about 100,000 dead is much better then the millions that would have died in an invasion. Only a moron would think 100,000 dead is worse then millions dead.
StockLooker, You have to get your facts straight. First of all Redstone never fired Mel, While they did not get along and that may have happen later, being fired was not the reason Mel came to SIRI. Second a recession is 2 consecutive quarters of negitive GDP. The last quarter was the first quarter we had negitive GDP. Need I remind you, up till just a while ago 5% unemployment was considerd full employment, we have only just gotten over that a few months ago. I find it hard to take advice from someone that cant get those simple things right.
P.S. If you go back far enough in the Sirius Buzz articles you will find a link to a video of Redstone on PPS talking about what happen with Mel and himself. Ether way it shows that Redstone never fired Mel.
Thank you Brandon,
I agree completely. I am tired of hearing Mel bashing and negative comments about the reverse split. I’ve lost a ton of money on sirius ~ because I repeatedly sunk everything in, traded on emotion and DID NOT leverage. My fault, not Mel’s. Hopefully, I’ve learned from it. I love sirius satellite radio.