Mel’s Methods
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
Patience is the key word. In a sense, the 18 month merger delay was a state of LIMBO. So although 18 months passed…NOTHING happened with the stock. So the REAL waiting begins now. I know thats a bitter pill to swallow…but this is when the TRUE longs will be separated from the posers.
It’s gonna take time. But the payoff is huge.
Tyler, That is My point also. My god I would expect that a normal investor not to be able to put together the last quarter and what Mel was talking about, having 400 million in savings in 2009 together. The analyst are totally another thing altogether. They should be able to see what is going on for christ sacks and if they cant then they should be fired for incompetence. The normal investor depends on their insight in to these things to be able to be able to put together 2 + 2. How hard is it to look at the last quarter results then take into account an estimate of future subs and then put in 400 million in savings to see that this company is not far away from FCF positive and profit. It is unbelievable to me that these analyst are that ignorant. If they are, they better find a new job because this is what their job is, to be able to see through the fog and give their clients the clear information.
John, do you think the analyst give their professional opinion for free? It isn’t free, the avg. stock owner gets jerked around by these “professionals”, for free.
I see the positives of this stock and the product is truly loved. However, there is a huge amount of debt associated with this company and high debt levels mean risk for investors. Many blue chip stocks with less risk are trading at discounted multiples therefore making them a better investment at this time. This is why there is so little analyst love for this newly merged entity. I believe in this company and its CEO so I will maintain a long position in SIRI. It will be so much more than a Satellite Radio Company.
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Maco, No I dont but they cant tell or are not suppose to tell the rest of us anything different then their paid clients.
The big difference is they give their clients the information first.
As a long time Sirius suporter and investor, I have sold have my 100,000 shares today at $1.31 with the intention to repurchase them on-sale at $1.00 in a few weeks. I have the strong feeling many longs and institutions are of this this mentality.
Tyler I agree completely. Also, for those who wanted Mel to give more detail, I believe many specific announcements concerning actions that have been/will be taken by mgmt are worth more to the future pps than than the sum of their parts. jmo
There has never been a more stressful financial meltdown than the one we….The retail investors are involved in…Right now….And what does a ceo of company that lost all our savings call us…Unsophisticate….This whole sitiuation has become a crisis in the us market system…Retail investors are getting destroyed and institutional jihadist…Are making it impossible to invest…..I have no choice but to sell monday….Cant lose more money….This money was all i had and its almost gone….This is truly sad…..
I feel we are close to the capitulation point. That’s when everyone is depressed and wants to sell in order to save what they have and think the end is here. The MM blow the whistle and bang, we are back to $1.50-$1.65 and they short it again and do the same thing over and over until solid numbers come from the company. It’s a game that traps us little guys. We are very close to a bottom. Good luck.
Patrick/Sirilong –
I agree, sold today after loing 3/4 of my $ and my last 5 years and to think how excited we started to get that Thurday morning pre-market when Sirius was hitting 2.83 on July 23rd as we waited for the FCC approval.
If I have the guts, I want to buy back at .89 cents & I’m still not sure what will happen because if car sales are as bad as it looks (worse 2nd half predicted) and a further deteriation of retail, even the cutting of the overhead will not save this stock from getting dragged even lower.
There is still 700 million of debt due next year and there is still that stock that has not been sold that Mel said would be at different points in time.
If this Dow takes a massive tumble towards 10,000, where will we be ?
Do you wait for Labor day to hear the Master plan ?
What did it for me today is that the Dow was up 300 and this was down so bad again, even after Mel bought at 1.37 & it also broke through the low last week of 1.29.
Sad, really, really sad.
This has ruined my life in the last 2 1/2 weeks. Even as bad as the last 3 years have been waiting, it seemed worth waiting for the approval & future prospects.
Now look at me, us….
tyler/brandon – what is everyones opinion/take on mel being on mad money on monday?
JM, dont put a us in front of that I am just happy that the merger is done. I say bye to all you guys. I hope you can get back in at less then a dollar but dont be pissed at Mel if that doesn’t happen. Remember that was your choice to sell and cut your losses. It is the risk you are taking. I on the other hand will not take that risk for 30 or 40 cents. That for me is a risk that I will not forgive myself for to save a small percentage of my investment. Think of it this way you already lost the major percentage of your investment even if it gets under a dollar. So why take the chance on it going up to lose more. That doesn’t make sense to me, but good luck with that.
I think selling half of a position and buying back in if siri goes lower or even buying back in a few cents higher is better than to continue to watch money sink down the drain. I am sure it will briefly pop one cent on monday when mel is on mad money. The lower it goes the more I can buy!
I think selling half your shares now and buying them back is an investment strategy, period. If it works great, if not you have cemented a loss and I doubt you will be back in if the stock goes higher, even $ .25. At this point there isn’t a clear channel (no pun intended) to play. It’s all a gamble. I will hold pat and if it goes down to a buck will buy more. I loved it a 2.60 and I certainly don’t hate it here.
The fact that many here are talking about .89 … 1.00 denotes that the capitulation is near if not history.