Merrill Notes That The Wheels Have Come Off
Cohen has lowered her projections on subscribers, noting, ” 1) September’s broad decline in US retail (lowest in 3 years); 2) soft electronics sales with Best Buy posting -2% September comp; 3) ML lowered US auto forecast for ‘08/’09 to 13.8mn/12.5mn vs. current SIRI guidance of 14mn; and 4) credit crisis has made SIRI ’09 refinancing prohibitive.”
The analyst lowered net adds by 47k to 409k, which represents a down 51% year over year comparison. She has also adjusted ARPU to $10.47 from $10.53, and has trimmed revenue by $7mn to $611mn (+15.4% Y/Y).
Cohen feels that dilution is likely as SIRI uses equity to save the balance sheet. Jessica notes, “Given illiquidity of the High yield and levered loan market, SIRI CEO Mel Karmazin has been obligated to use SIRI equity through debt swaps to take out pending maturities. The primary benefit is the extension of optionality to the extent a restructuring (i.e. bankruptcy) is averted, however, it comes at the cost of dilution.”
Cohen maintains UNDERPERFORM and has Lowered her price target to $0.25. Cohen has joined other analysts who now see weak auto sales as another hurdle for satellite radio to negotiate. Between low auto sales, and a credit market than can only be described as terrible, she and other analysts see real challenges for the company. Should the company be successful in renegotiating their debt, and should auto sales turn around, then, and perhaps only then will the analysts on the street sing a new tune.
With Sirius XM Radio due to announce their Q3 numbers soon, it will be interesting to see not only the reaction of the street, but analysts as well.
Position: Long SIRI
And, for this, we should re-elect Melvin Karmazin to another term?
The Board needs to be re-vamped as well.
This “holiday” Shareholder’s meeting is a farce. I would suggest that the scheduled meeting be re-scheduled for early January and that the company be ready to perform an Executive-level search for the replacement of the CEO, as the current CEO is obviously in over his head.
Can we assume that Sirius did not get refinancing through Merrill?
Ok, let me get this straight…..
Jessica has lowered her price target from $4.50 to $3.90 to $1.00 to .25 – all in the last few weeks since August…..
These people get paid for this kind of analysis?
People pay for this kind of analysis?
Spanyo…I did not think about that,
Interesting insight.
I hope not, but who knows at this point. The news from SiriusXM to stockholders of the company continues to be silent.
vaporgold
We might as well call a spade a spade here boys and say siriusXm is pretty much screwed.
Ive tried to be positive about this product and its stock as much as anyone but with the news so grim in the auto industry right now siriusxm is in trouble. The only hope siriusXm has is if they can weather this storm, make it past 2009 and hope that things improve. They have got to get rid of this insane debt. If they can clear that hurdle without going bankrupt maybe this stock might recover in a couple years. Stocks going down tomorrow and id look for it to stay down until earnings and if its even slightly off we are looking at dead duck.
Financial banks in trouble have gone abroad for help and beg for money in London, Japan, India and china
Has Brainy MEL thought of going acros the channel to ask for help and stake in the company that can have future presence in Europe, Asia and Middle East desert
I certainly hope MEL is not sitting on his arse trading billions of shares for a Quarter each when he had the chance when it was a buck or more
“Jessica has lowered her price target from $4.50 to $3.90 to $1.00 to .25 – all in the last few weeks since August…..
These people get paid for this kind of analysis?
People pay for this kind of analysis?”
Demian,
This is pure criminal. Cohen changed her tune right after BAC bought Merril. She is now the new Jacoby.
Cohen numbers are flawed. With 50% penetration rate for 09′ at 12.5 million autos that is 3.1 subs. less churn. This is worst case scenario.
Remember this just a short 20 days ago.
SiriusXM CEO: Car Sales Can Tank And We’ll Still Be Fine
Joe Weisenthal | October 14, 2008 3:52 PM
This much is clear: The market has little hope for the future of satellite radio operator SiriusXM, whose shares trade at a meager $.50 — though that’s almost 50% higher than their rercent lows! CEO Mel Karmazin has been making the case for awhile that the company will turn the corner next year, an argument that would seem to be getting tougher by the day.
The company has a lot riding on automaker pre-installs, so what does it mean that car sales are tanking? Not much. David Kaplan at paidContent reports Karmazin’s presentation at today’s Media & Money conference:
We’re a subscription business. About 96 percent of our business comes from that. The largest driver is when you go out and buy a new car, every car company has committed to putting it in. Next year, we’ll have 50 percent penetration. There are about 17 million new cars produced a year. That number will be 13 million next year. If there are only 12 million cars sold, no one has forecast that, but even if the worst happens, 6 million will leave the assembly line with satellite radio. And our surveys show that 50 percent of the people who are offered satellite with their new car, take it. That will get us to $300 million revenue growth even if Detroit has a very bad year. Even in a market where cars are not doing well, we can still feel successful.
Beyond sales growth, the other big concern n this environment has to be the company’s debt load. Again, Karmazin says not to worry, and that he’s confident the company can refinance $1.1 billion in debt due early next year. Good luck on that.
A good friend of mine just told me she has cancer. I couldn’t give a rats ass what this stock does anymore. I’ve wasted TOO much of my life pondering it’s plummeting stock price.
No more. I’m done. Fini. bye.
when do you suppose the good news will come? This, along with friggin’s post(really sorry man) could make a guy totally lose it.
Friggin
SORRY to hear about your friend. I hope you change your mind and recant your Done,Fini and Bye. The board will not be the same without your rants. Be well my friend during these trying times in your life.
How much do you think the SP will get hit tomorrow due to this?
Anyone else considering putting in a stop-loss order for your shares tonight?
Thanks guys. It’s been a great place to vent and commiserate. I thank u all for your support…and kind words.
I’m going to visit my friend now in Brazil where she lives.
I’ve lost alot these last two years. And I am not talking about money anymore. And nothing compared to what my friend stands to lose.
I am totally serious. I was so absorbed with this stock…that I missed out on so much life.
I am sure I will be back. My shares are too low to sell.
But no more rants about Reverse Splits or dilution from me for awhile. I’m totally letting go.
Thanks again for the fun times. Please don’t let this stock get to you too much…whoever is reading this.
Cheers,
“Friggin Life is Short-so Enjoy it-Regan”
Well Said
friggen, ya gotta do what ya gotta do. You and I are polar opposites politically–which we can be in our great democracy–but also on the same wave regarding what’s most important in life. Most supportive thoughts for your friend in Brazil. As for me, though, no folding yet, just holding knowing that fear mongers are doing their worst right now. Guess I just need to concentrate on other positions because, without some miracle surprise (now would be good), this stock’s down for ’09 as well. Strength and honor, friggen.
Well folks . . . today we have found three more scapegoats for Mel Karmazin’s abysmal execution of the business plan . . .
1.) Tyler Savery: His favorble review of the Slacker will be the sole reason for poor holiday retail numbers;
2.) Michael Hartleib’s dangerous conspiracy litigation (or was it just a refiling of an old law suit?) of which we should all be very careful to distance ourselves from and;
3.) Jessie Cohen, once hailed as the best media analyst in the business and a friend of satellite radio. She must now be aiding Bank of America’s secret short position.
Folks, when is enough simply too much? First Wienkes, then Janco, now Merrill. Capitulation? The only capitulation I see is in the face of Mel Karmazin when you watch the Autoline infommercial.
Check out the “Just Looking Back In Time” post over in the forum section. A very interesting read. Also, research the concept of “organizational development”
F-Regan: very sorry man. been in your shoes . . . really does put things in proper perspective. we will miss your posts but understand the priority.
Brad,
The Merrill report came out this morning so traders knew of the news during the trading hours.
Friggin
We will keep you and your friend in our prayers. Money can be replaced. True Friendship cannot. Your friend has something special in you! Keep the faith. Check in from time to time. We will all need a Friggin rant(even if it is severly toned down)to get through the days ahead. Safe Travels.
Thanks friggen.
Friggen.
Take care. Prayers go out to your friend.
Check back when you can. Your the best.
Socal
As to the article. At this point. And at any point in my opinion. It’s always been scoreboard.
And at .31 what else is there to say. Analysts can print whatever they want. What can we say.
Only Mel can respond and he gets his first real chance on November 10th.
We will see then what’s up. I believe by the time his conference call is over we will have actual data, to compare to these analysts numbers.
At this point Mel, is the laughing stock of the investment world. I could care less, about all his previous accomplishments.
Friggin-
You and your friend are in my thoughts.
I wish your friend well Friggin.
It is difficult to ignore the close, friendly relationship that has existed over the course of many years (25 years, at least) between Mel Karmazin and Jessica Reif Cohen of Merrill Lynch. I am mindful also that the ridiculous presentation that Karmazin gave was at a Merrill Lynch event. IIRC, Cohen was present and she may have given the introduction.
I wonder why, in these market conditions – where everyone gets away with illegal naked shorting, painting the tape, conflicts of interest abound, the SEC lets it ALL pass, doesn’t enforce any rules – a good friend like Reif Cohen can’t paint a rosy picture OR just keep her mouth shut for the sake of her good friend Mel.
With this in mind, it seems reasonable to believe that Mel Karmazin wants SIRI shares to be 25 cents. The other asshole Weinkes said 25 cents and it never got there. There is marked determination to drive the SP to 25 stinking cents. Why? Who benefits?
Friggen – sorry to hear about your friend. Cancer is a bitch, nobody should have to go thru it. This company is just a tiny piece of the reality of our lives and this is a reality check to be sure. If money is ultimately lost in this company, most of the people losing it will get back on another horse and get their money back…this is one of the great things about human nature, there is big heart in our DNA, and we can overcome. The same spirit lives in people battling cancer and many beat the odds and live on. Keep posting and tell us the story. Fuck the stock, what will happen will happen. Pray for your friend. I hope & pray that this ends up with a positive outcome. I hope for the best here.
Analysts are just working with the available data… Mel & co knew all about this decrease in auto sales long before Q3 data from the auto manufacturing industry became public – what they are chosing to do about it (the cost side management of the comany) remains to be seen. The most important point in a recession like this is to Concentrate on the cost side of the equation and live to fight another day – light will soon be shed on the progress here. I am dying to see a sense of urgency. Sometimes playing for time is all there is. If they want to succeed here (and I think they Do) they will do it by avoiding BK and letting the credit market mess blow over.
No Shit? REALLY!? I hadn’t noticed but THANKS for letting us know Merrill.
Siri triples well before apple doubles! Maybe 8 to 16 months but we will see siri @ a fucking dollar! Good luck FRIGGIN
Friggin..
You are one of the reasons I hang out here from time to time. I also love the rants, it is like we are venting our frustations through you publicly.Thanks for doing such a good job.
I hope you come back when when life allows it.
Take care
vaporgold
You wonder if the analyst is covering her ass, due to the recent lawsuit……………………..
Someone alluded to her being a close friend. Maybe distancing herself from the legal mess, is what she is after.
Monday we will hear from our great leader of the merger. We’ll see………………
I still don’t believe we will go to .25 a share again.
Today could be the day I find out I am wrong.
If Mel has not been misleading in his recent statements, and we are on track, the 3rd qtr cc should be fine.
I e- mailed investors relations yesterday for a date, but again no date set, no news from SiriusXM mangement.
I am guessing Mel does not want the 3rd qtr cc without some good news, which to many of us would be the servicing of the Feb note in it’s entirety, and that the company is on still on track with the numbers even with the poor car sales which is very possible.
If the above holds true, the stock pps will increase.
If it is bad news, look out, .05 could be a high and look out for SiriusXM next moves of taking the company private.
I still don’t believe with the cash flow and reductions the company should be performing this poorly.
The growth rate of this company is really astounding when you look at it. This year it will even be better then last year when it was the fastest growing company in America.That is why financial instutions should partner up with SirusXM, everyday that goes by is another day of getting closer to goimg green.
Just does not make sense to me, unless SirusXM’ mangement has other motitives.
imho
vaporgold
Socal…
Monday Mel has a press conference or 3 qtr cc???
vaporgold
Vaporgold..
Below is what Etrade lists for Siri.
Q3 earnings are expected to be announced on November 10, 2008Estimates: -0.07 | -0.091 | -0.13 (High | Mean | Low)
Socal..
Thanks, I can’t wait to hear the numbers.
I think it will be the pivot able time for the future of this stock one way or the another.
vaporgold
Vaporgold.
I completely agree. Time to put the rumors to rest, and provide real data.
Please tell me that we will no longer hear the, woulda, shoulda and coulda lines from Mel!
Socal
Sirius signed the NBA over to their XM side to get Sirius listeners to cough up another $4.99 to get it back. I have three radio’s plus an XM radio not yet activated. I will not pay that 5 bucks when I should be able to subscribed for $6.99 and turn my XM radio on and get ALL of XM instead of a few.Not one more cent to Sirius.
Friggen,
Peace be with you and your friend – don’t be a stranger……
Demian
received email from siriusxm today with info about meeting and proxy.
Its true SIRI might triple before Apple doubles but the problems with that logic is that SIRI might file Chapter 11 before that time. On the other hand I don’t see Apple filing BK anytime soon if ever!!!
Merrill’s analyst is afaid of losing her job
since she is now employed by BOA.
does she realize we already went to $0.25, actually, think it was $0.22, and we went up from there?
these analysts know nothing! even Weikles was way off with his targets–they were too high, except for the last one which is now too low.
how does Cohen justify her prior targets?
how does Weikles justify his prior targets?
these are just manipulative targets, not predictive targets.
Congress and the SEC should investigate these practices and throw some of these people in jail for these practices.
Consider this…
Up to now Weinkes is the only analyst with any credibility when it comes to Satrad. Perhaps Jessica is bringing her rating down to him in order to give Mel a chance for a boost on Monday… expectations are exceptionally low and even a little surprise could have a nice short term impact on the pps. If Jessica were to upgrade her target price next week, it’ll carry more weight now that she’s down here with Weinkes.
SIRIUS held it’s own today with the worst of all news. Must be something positive coming. One month of down sales doesn’t make a bad year. I read today that sales have already picked up with gas down to $2. I thought the bottom would drop out today. Mel knew these bad sales were coming and the high gas prices? What a prophet. I hope the Q3 figures surprise. Maybe that is what held up the price today. Could this be the bottom for SIRI?
What I don’t understand is why GM defended their stock with positive comments and Mel hasn’t. And when is the Q3 results coming? Wouldnt they have leaked if there was anything positive coming? Or is Mel going to kill the shorts? I would love that!!
Mel has been INSANELY silent. After the criminal 17 month merger delay that Mel CONVINCED us would be GOOD for the shareholders….he signs that UGLY deal and sells us out to the shorts.
HE FUCKING SOLD US OUT TO THE MUTHA F’in SHORTS!!!!
The few times he HAS spoken he said NO on a Reverse Split Or further Dilution.
AND WHAT DOES SIRIUS DO a WEEK LATER???
It issues a proxy ASKING FOR A GOD DAMN 1 for 50 REVERSE SPLIT and an CRAZY 4 BILLION MORE IN DILUTIVE SHARES!!!!!!
Now even the once FRIENDLY analysts are giving us a .25 cent target price. It’s not just GS anymore.
To think I am stuck in this stock when it was only $1. I WAS going to put my money in ESLR at $2.50….but Nooooooooo.
Now ESLR is nearly $6 in just a couple of WEEKS!!!!!! And probably going back to $8 or $12 again. I could have made $10 grand in a week. Instead I am DOWN 6 grand!!!
I HATE this stock. I HATE Mel. But I LOVE sat radio.
TOTALLY SUCKS. Mel is a stupid ass big toothed liver spotted liar.