Mel Karmazin recently described himself as an operator. The man has brought many ventures to profitability and beyond, and he is the CEO of the newly merged SIRIUS XM Radio. One thing about Mel Karmazin is that he is steadfast in obtaining goals once he publicly states what they are. He has proven time and time again that he will accomplish the things he sets out to do. He is a business man that is tough to be across the table from, but a joy when he is on your side.
With the merger between Sirius and XM, a new company has been born. Karmazin takes the helm and has set a course for certain goals. $400 million in synergies, strong cash flow, and ultimately profitability. Given his track record, it is pretty much a foregone conclusion that he will get there. Those that want to know how this will be accomplished may find disappointment in the level of detail given thus far, but a bit of waiting has potential to pay dividends.
As a stand alone, Sirius Q2 was good. Metrics seemed to scale across the board, and perhaps one of the more impressive lines was how well costs were controlled despite a much higher royalty rate. While the merger will still deliver costs in the short term, the potential going forward is substantial. Investors and analysts may not be given the path that gets the company to profits, but Mel has pointed everyone in the right direction.
Over the coming weeks, we will all begin to see activities that will give new flavor to what the merged company will do. These activities may help investors gain confidence that the general outline offered by Mel is on track. The wait for the merger was long and frustrating one for investors, but the merger was simply the first step in the process. Realizing the benefits of the merger is where the real meat and potatoes are, and that will begin to take shape soon.
Mel Karmazin is a man that has a laser like focus on his goals. If you have followed his career you will know that when he gets committed to something, he finds a way to get there, and while this may cause unease with current market conditions, it is tough to bet against the track record of a man like Mel.
The merger is fresh and new for everyone, but clearly Mel Karmazin knows what he needs to do. In the conference call he mentioned that he has already had conversation with Rick Wagoner, CEO of GM. This conversation alone is indicative that Mel already is setting plans into motion that will get the company moving on the path to better times.
Patience may be hard for investors at this point, but it may be exactly what is needed. If you had to had to have someone on your side, driving your company, Mel Karmazin, in my opinion, is the man you want.
Position - Long SIRI