Merrill Notes That The Wheels Have Come Off
Merrill Lynch analyst Jessica Reif Cohen issued a critical report on Sirius XM Radio today. The media analyst notes that the auto sales for 2008, and even 2009 appear to be troubling for satellite radio as the OEM channel has been an integral part of the growth of satellite radio.
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







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!!!