Sirius XM 4th Quarter Call
When Sirius XM released its 10K results, I was very negative on the company’s outlook. My opinion was and remains that the company needs to do more in the way of marketing if it is not only to survive but thrive. It may be that my doubts were unwarranted. SIRI stock has seen a dramatic increase on a percentage basis since the release of the report. The conference call was met with approval, as shares are up more than 21% today.
The company provided a much clearer perspective on the benefits of the newly merged entity. Despite a horrible economic landscape, the synergies of the merger are paying huge dividends. Synergies have resulted in greater revenue growth and lowered costs. The company is operating with the frugality required to survive this difficult economic climate.
Although the news of new Apple applications got most of the media’s attention, the real news I believe can be found in the hints that the company provided during the call. As an example, the company spoke of the negative impact that the closing of Circuit City had on its retail sales. The discussion that followed brought with it an acknowledgement that the company forecasts more traffic in lower priced retailers, and a desire to do more in that area going forward. When someone mentions low priced retailers, my first thought is Walmart.
Getting involved on a larger scale with companies like Walmart is good, but there is no way that Walmart will provide the solutions the company seeks without an aggressive marketing campaign to support it. With a simple marketing effort, the company’s products may end up on the shelves of high traffic auto parts retailers such as AutoZone. As more and more people seek to repair their older cars rather than purchase new ones, getting the product in these types of stores will help retail sales recover from the big electronics retailers which have seen foot traffic come to a standstill.
It just so happens the company mentioned a marketing push as well with the company hinting at a plan to deal with declining auto sales. This is what the company has been missing and the street seems to think that Sirius XM is at the right place at the right time as its shares continue to rise.
Position: Long Sirius XM
Thank you-were there any discussion of reverse splits in that call?
i was interrupted several times, but I didn’t hear a single mention of it.
I did not hear anything about a reverse split.
I believe that we have till November to get to a dollar. Hopefully by then everything will be in place and they will start a buyback.
Good article Brandon. I agree completely for once. Are you getting smarter? LOL Kidding. Yes, marketing was my big concern, and was concerned to see it drop from quarter to quarter. I wanted more dollars spent their, adding subs through retail is much more profitable than from cars. Expanding availablity of the radios doesnt hurt either. Exposure, exposure, exposure. I wish he did more than hint at future marekting plans, I wanted more there.
You should also consider the commercial implications that Sat Rad offers for businesses.. Considering MUZAK filed for BK.. this opens up a whole new avenue for Sat Rad installation.. If SIRIUS can make a strong push into the commercial market,, they could establish and maintain a whole new market.. all businesses need music, and they all have to pay for it especially if they have more than 2 speakers,, ASCAP,BMI and so on. Most now use MUZAK,, but the landscape could change if SIRIUS would make the effort..
Brandon, If you had believed in Karmazin’s reputation, and the evidence that he was hard at work with synergy savings and re-finance in the interest of shareholders(Malone vs. Ergen), perhaps you wouldn’t have been such an insecure analyst. Sometimes it’s a lot like picking football teams- unpredictable. But as they say, good teams find a way of winning.
Never-the-less, I appreciate your analysis, but I’ll stick to my own gut and due diligence.
The companies numbers werent that bad at all. The real negative was the 85k in subs of course. The Iphone/Ipod touch has the ability to reach alot of subs. The key is an internet only subscription though. Dont be foolish siriusXm and try and charge 13 dollars a month to allow people to listen on the iphone. Charge 3 to 5 dollars a month for an internet only subscription that will not work in a car.
Think about that. If you can get 1 million iphone users to buy in at 3 dollars thats 3 million a month. Thats 36 million dollars a year that you can get NOW. After this, I would examine the posibility of discounted prices per 1 million subs.
Youll make the offer to good to pass up. Before you know it that 1 million subs will become 3. Remember, There are about 20 million iphone users out there. If you could just appeal to a forth to half of those users youd be flying.
Going back to the topic, SiriusXm needs a retail product that is “cool” They need something that the kids and teens want. If they can do that then they can push into the retail markets alot better. The products they have just have no style to me. I like the new Xm player but what about an internet only player to support my idea above.
I can think of countless ways to make money for this company. The potential this company has is scary. It just has to execute the ideas and its going to be fine.
Lastly, Car sales wont be flat forever. SiriusXm does need 100 percent in cars. Once this economy starts to unstall then they will be sitting in a good position.
I believe that the sub numbers were hurt by all the false talk of bk, and I think I heard them say so during the Conference Call…
shark.
You are right about that! I don’t know how many times I’ve heard non-subscribers, and even some subscribers say to me “Hey, did you hear Sirius/Xm is going bankrupt?”, or “Those guys went bankrupt… did you know that?” There is more misinformation about this company than anyone could possibly fathom. It is just mass confusion, and Sirius/XM has nobody to blame but themselves. As usual, the American public (Joe six pack, Biff “Cops” watcher, and Kirsten QVC addict and Oprah disciple) absolutely must be led by the hand and be told and shown what your message is…. or they are not going to get it! Satellite radio has failed miserably in forming ANY connection with the masses. They have never even made an attempt. What the hell are they waiying for? Here they are, fighting for their life, and the notion of even the most minimal advertising campaign still seems to be an alien concept.
If this doesn’t change, they will continue to tread water like they are wearing a concrete bathing suit, and then they will sink faster than Oprah in a kiddie pool.
Where is Tyler Savery? We could use some of his more nuanced analysis of the CC and its implications.
anyway to find out the possibility of a stock buy back once we hit positive cash flow? anyone provide evidence that this is a real possibility??
thanks
The first order of business is to retire the debt – and indeed i believe it has been mentioned that the bond terms prohibit a stock buyback until they’re repaid.
Reducing the debt has a similar effect by making our shares worth more anyway.
What I thought was interesting is the CEO of Liberty Media Greg Maffei’s interview w/ CNBC about Sirius Xm & Liberty. He said in passing that he thought there is a case to be made for turning on all the idle Sat. radios for free and having a limited format but w/ commercials. This would go head to head w/ AM & FM. You could have over 40 million listeners to Sirius Xm by the end of the year.
Mel is shrewd the only disappointment and I admit it was a big one was the subs. Suspect he knew he had enough good will on getting the financing done and the I-phone app that he sand bagged a bit. I think he knew he needed 19 million subs and announced that. With 2009 looking tough I think he held back 150,000 subs. He publically stated they were nearing 20 million a month ago. I am sure he used some technicality to legally hold back subs. All in all 300 million cash…300 ebitda…I-phone ap….financing done…not so bad.
Brandon, I posted most of this on Newman’s 5-point article but some comments apply here, too. I totally agree with the need for a broad promotional blitz. With the Liberty Media partnership you would hope there will be some synergies to cross pollinate subscribers. Also, almost every piece of marketing mail I receive has a DirecTV promo with the logos of all of their corporate partners. Hey, just add Sirius XM’s!
Finally, and I’ve mentioned this several time on SB, the 2010 media blitz can begin with a cool Super Bowl ad that could be the opportunity to announce a brand new product (a la the Owellian Macintosh Super Bowl ad in the 1980s). This could then be the Sirius BUZZ of the office water cooler discussions the following Monday, and generate new revenue streams!
Great positive article, Brandon!
Neal Barkett,
As I have stated in the past, I have a cousin who is representative of your typical lazy, stupid, apathetic and technologically impaired/challenged barely any potential subscriber. He bought a new car with 3 months of free X/M. He hardly ever listened to it, and now that it has expired, that radio sits in that car waiting to rust. The asshole wouldn’t even utilize a fantastic FREE service – because he likes AM sports talk radio, and he is too goddamn lazy to push the on/off button that says XM on it. Fortunately, not everybody is as ignorant as this human couch cushion. And now, predictably, he says that he can’t afford to re-activate it. He is so full of shit it isn’t funny. What a total loser.
Nevertheless, getting these dormant radios turned on again is a must; just having them on is like an advertisment for satellite radio. One car can have many other passengers other than the driver/owner. Whatever it takes to introduce people to the product must be pursued. Anybody who gets into one of these cars is liable to come out of it “hooked.”It’s a huge waste to have all these radios in these cars in deactivation mode. Time to fire these radios up and have satellite radio blasting from as many cars as possible. A cetain percentage is bound to end up liking what they hear – and really like it without commercials. It would be like a giant mobilized billboard, getting the message out to every town, city, and county in the country.
You will never know the publics honest opinion of your product until they have been introduced to it. If this company ever starts to use good old fashioned common sense, you will see things start to change.
Thanks for revisiting the cousin story. I always get a good laugh out of the way you tell it.
Brandon Matthews,dead elvis,
The r/s I don”t think they would bring that up in their CC for discussion. I have been an Invester in sirius for 5 yrs. and I stiil hold as a long, but I don’t like what I see in their 10K.
They have lied to us longs to many times. If you look at the 10k in the nasdaq.com
Brandon Mattews, dead elvis
Sorry for the first post hit the wrong key!!
When you look at the 10k in the table of contents Item 4. (Submission of Matters) pg.29 the amendments that were voted on.
Read #3 now they say that the r/s is to reduce the number of authorized shares wthin 2009 at their discretion, no longer is it for delisting purposes. I spoke to Paul B. 2 months earlier about this and I asked him if this was still the case and he strated to back paddle I don’t trust this company any more.(Brandon or anybody
please correct me if I am wrong). and Brandon If you do have a part in this coming movie don’t forget that sirius has had its part in the manipulation of the stock price also they are not clean!!!
Hey all, just an aside……………I think we really have to get down and dirty and fight back the bias-crap…………I mean, I don’t think any of us buy our stocks directly from SiriusXM but rather through a broker. So I’m sick and tired of going on the investment site, especially after todays report and finding NO NEW’S whatsoever regarding the companies conference today. So I am threatening TDameritrade with closing my account if they continue to cater to the anti-Siri media bias; to wit:
“I’d like to know why it seems that this investment research site seems to be media biased when it comes to certain stocks.
I as an investor and client do not appreciate this, and would be willing to close my account if it continues………
Thanks for Listening,”
THE DOC
We ALL NEED to do whatever little we can, and in tandem, it will really mean a lot!!
BTW…….My Office is installing wall-to-wall Siri Radio (business account…costs more!!) as well as company cars, including the home office account, which we have always had!!
Can’t wait for the iPhones to kick in!! Have all of you who should and could, done this??
Also, ALL OF YOU should write your brokers to stop the Shit with Sirius or else face Sirius consequences!!!!!
I heard a nice Radio Shack ad on radio today in Las Vegas seemed like 30 seconds…buy a $50.00 gift card and get a radio for $30.00. It’s a start to advertising….was nice to hear it as i was driving to work.
HOO HOO Robin, I am making this company successful. HOO HOO Robin I accuse Oprah of not doing enough to help the company, but I do nothing either, I knock O and A, I only work 4 days a week 38 weeks a year. MY POINT, there is huge marketing problem, the highest paid do jack squat!
Brandon Matthews mentions that SiriusXM could be on the shelves of auto parts firms. That is a spot on idea. I hope it has occurred the marketing people at SiriusXM.
I would add to that list tire companies and any other automotive retailers that have installation services.
Many people will buy the radio from AutoZone,or O’Reillys, et al, and install it. Others like me won’t. I only install toasters and desk lamps.
So, that person who gets new tires, mufflers, brakes, etc. could be putting in a sat. radio too.
Here’s yet another idea. They already have oem deals. Why not sell the radios right in dealerships parts department?
One little caveat. Whenever we put forth an idea that would benefit the company and consumer, Sirius tends to shy away from it for the next 10 years.
I bet I could set up a mini Sirius stand on a Saturday at my local Auto Zone and write up at least 5-10 new subs. Multiply that times all the auto parts stores in a year and you add significant new subs.
Good AM all!! I’m wondering the day of, and after, the CC;
“Where the hell are all our Brokerage House Upgrades??”
This stinks………………………..!!
See how they’re trying to keep the pps down today?
MEL needs to DOUBLE-DOWN soon!!
Point 1. Sirius is not being covered by many firms.
Point 2. Upgrades/downgrades come a few days after a call, as analysts revise their models.
‘K’, thanks………….;)
Jus getting a little antsy here!!
Brandon,
We’ve have sold Sirius and XM for years now and XM is still the only one paying us for the commission. Sirius has their head up their rear end…and they treat the retailer like a red-headed step-child. Maybe if they would ante up and pay the retailer a commission, we’d fill up the store again like we did back in 2004! The DEI channel was a joke and with Circuit City gone…it’s right for the pickin’!!!
WorkHardDog!
I’m gunna faint! I saw a tv commercial about Sirius Xm. It seemed to be one from the past w/ some minor changes. But at least it’s a start. With all the association with BK & Sirius Xm in the news now is the time to get a positive fresh new marketing campaign up & running. Sirius Xm is finally getting some solid footing and showing some confidence.
Boy, did they have to ‘clean-up’ this post, huh !!
If they had cleaned up New Orleans – after Katrina – they way they just cleaned up the pigsty we made of Siriusbuzz, it would look like Emerald City!
DRALAND,
Your not kidding; this had to be the biggest clean up job since Katrina!
LOL !!
Steve, LOL !!