Sirius Finally Living Up To Its Name
Sirius is the brightest star in the night sky and it happens to be where Sirius Satellite Radio first got its name. As a broker, I would often look for quality story stocks. Sirius XM has just become every brokers dream. In shocking fashion that even Hollywood is now taking notice of, Sirius XM CEO Mel Karmazin has again cleaned up the mess he inherited as a result of massive debt obligations left behind by his predecessor.
To the amazement of even the brightest minds on Wall Street, Mel Karmazin has brought Sirius XM satellite radio back from the dead. Wall Street’s darling had been all but written off, with even its front man Jim Cramer making recent claims that the equity was worthless. No doubt Mr. Cramer is looking frantically this morning for a way to explain his way out of this one. I for one can’t wait to see him eat crow, but I digress.
Yesterday’s news was better than most investors realize. Most can clearly ascertain that all of Sirius XM’s 2009 debt obligations have been put to rest. The stock enjoyed a nice percentage gain on that news but the story is far from over.
There has also been the overhanging concern regarding further dilution to the stock. With the closing of yesterdays deal between Liberty and Sirius, the stock was actually diluted by 40%. A special thanks to Homer985 on the SiriusBuzz forums who correctly observed that the fully diluted market cap of Sirius XM had risen to 889 million from 496 million dollars. In a nutshell, this dilution of the common stock should have caused an equal percentage drop in the share price. The stock had been so oversold that it actually enjoyed a very nice gain on the news. So where does it go from here?
Betting on Satellite radio’s failure is a no win situation for any short seller. There is simply no reason to short SIRI common stock at this time. Taking a look at the bigger picture, many experts suspect that market capitulation occurred yesterday, which means we may have finally seen the bottom of this recession. Sirius now sits on a mountain of cash, enjoys freedom from debt, there is no longer an overhang of dilution fear and let’s not forget about the 6 billion dollars in tax credits that the mainstream media used as ammo against Sirius. That money is as good as cash to the company now that it has survived.
As the only Satellite radio provider, the company now enjoys a position which no other company in the sector can even dream of. With the annual report due out in a matter of days, the street will be looking for execution plans going forward. We can all expect analysts to again begin coverage of the stock most likely with buy ratings, after the stock runs up in the short term of course.
Position: Long Sirius XM
Siri always disappoints. I expect that to continue to happen.
Alan Berman is on drugs, Sirius is the best and always will be.
like i said if u don’t like what u hear then CANCEL stop with negitive remarks!!!
then short your shares………………….
Mountain of cash is a bit optimistic. I hope Mel advises on the conference call that SIRI has at least 350-400 million in cash, and he expects to end the year with at least that much. He has to guide to the addition of 3 million subs in the next 2 years and I would hope 4 million. He has to resign Howard at less money..I think he has to cut programming costs by at least 75 million. Probably dump Martha and Oprah or at least one. I-phone ap along with an add campaign. We will see. I am optismistic for the first time in a while.
Wow. How can any jaded long read these words and NOT be inspired just a little bit.
I’ll admit. I got the warm and fuzzies reading this article. And why not. As a long suffering long…it does feel good.
Still…on the flip side…I am guarded too. How can we not be after being thru what we’ve been thru lo these past 2 years(or longer for some)?
About Cramer eating crow? We’ve seen him do it before. And it sure would be SWEET. But something tells me that he has soured by the backlash(and death threats he got) over his flip flop on Sirius that he will do ANYTHING he can to spin this news negatively.
Maybe I’m wrong. I dunno. I sure would rather have him eat crow, invite Mel on and become Sirius’s biggest public cheerleader again. But considering this economy and how everyone is walking on eggshells trying not to stick their neck out too far….I am doubtful.
Did anyone catch that GREAT piece Jon Stewart did on CNBC the other night? And how ALL their predictions this past year came out wrong? He nailed Cramer, the Fast Money guys, Kudlow, and Sqwuak box so good. It was priceless. If you haven’t seen it, just youtube it.
Anyway…good feel good article Brandon. I’d really like for it to be true this time. As always, we’ll see what happens. Only then will I know what I’m gonna do.
Peace.
Good article Brandon… To all u whiners and babies if u don’t like it CANCEL!!! Yesterday’s news was good news gives some breathing room for Mel to work with and hopefully pay off this debt. This as i see it is a new beginning for satellite radio and hopefully the stock will start to gain instead of holding its own. LONG LIVE SIRIUS-XM!!!
Great article – I think it reflects a return to optimism across SIRI circles right now. As with the others – I am a bit guarded in my optimism – but I think this time we’ve turned a real corner. Keep up the writing – many of us appreciate the balance it provides to the rest of the news we typically receive for SIRI….
Brandon turns around in a day! LOL Come on Brandon we all know you are a smart guy but address
Retail
iPhone app
Used cars
MLB possibly coming to Sirius.
Get down to business on the issues you haven’t addressed in both your extremely pessimistic and extremely optimistic posts in the last couple of days. Lets get the meat and potatoes.
Of course the debt wasn’t dealt with per se. It was merely delayed…and at a greater interest rate I might add.
This is how the media and Cramer will probably spin it. Sad but true.
But like you said Davey, it does give Mel some breathing room. It’s really all up to him now. The merger is done. The 2009 debt is not an issue for now. Can Mel work his magic now? His proven track record cannot be denied…but this may just be his most difficult challenge yet. Especially in this economy.
We’ll just have to wait and see.
If there is more COH then previously thought….I really do hope that we start seeing some Sirius XM commercials on tv. This product is great with 20 million subs….but a lot of people just don’t KNOW anything about it.
A kick ass creative campaign like Apple does would just be killer right about now. That along with a direct attack on other internet radio companies like Pandora and Slacker. Sirius NEEDS to be more aggressive here. If they do, they could steal back the internet thunder from these two and win the hearts…and the wallets of the youth. Add to that an app for the iphone….and look out world. Just Awesome.
Nice job Brandon. Attonement is a wonderful thing. It’s certainly about time that some writer with MSM exposure tells the positive side if SIRI. Let’s see if your bretheren of reportage will follow suit. There is litte reason not to. All this company has ever wanted was a chance to prove itself and back-up their claims and vision of their own future. Mel Karmazin never asked the MSM to be handed any positive, freebee sentiments. In fact, he got just the opposite: the most heinous deluge of incessant negativity maybe that the investing world has ever seen. I’ve been in this game for 10 years. I just can’t recall another company who has had so many people, writers, pundits, et al, betting against them and almost begging the heavens for their failure. But on Mr. Karmazin’s behalf, we the SIRI shareholders, expect, no we demand, that the MSM who have now lost their waged war against this company to bake up a nice big humble pie for themselves, eat it, and begin reporting the truth. The truth that SiriusXM has beaten the odds and is alive and well. The truth that the reports of their death have been greatly exaggerated. The truth that the future looks as bright as ever. And the truth that with the help of John Malone, Greg Maffei and Liberty, SiriusXM has accomplished the near-impossible in a market that is no less than the worst this country has ever seen. And not once. But twice. Jim Cramer. I personally am calling you out my friend. You left this stock for dead and advised your army to do the same. Now shareholders who withstood your hatred, relentless negative spin and flip flopping, want your reconciliation and we want it made on-air sir. Are you man enough?
sl62
Thanks for the direction on my latest buy. I now own over 400,000 shares of SIRI with the average at .202. Previously it was at .71 with about 40,000 shares. It was your response that I bet the house on, and I am glad that I did. When the SP hits .21, all the potenial for loss will be gone and I will start over on this one. I am technically in the hole by about 21,000 at the moment, but every penny is now worth over 4,000.00 dollars. Thanks for your support on the strategy and for your endless knowledge on this company. I still advocate buying now, before the ascension begins.
Good job on calling out Cramer. However, I doubt he will ever have the courage to recommend this stock, especially if it stays below the dollar line. It was very ugly listening to him describe the future of Sirius XM with little or no hope of survival. Sirius was not the only company he has missed on. GE was something you should “buy for your retirement” and was recommended at about 30.00 a share. It is around 7.00 today. Glad I did not listen to that one. I think now is a great time to buy GE, but then again I am no professional broker either.
Anyway, thanks again! I really appreciate all that you reveal in your posts.
Long Sirius XM
As much as a sensationalist Cramer is, he always tells people to do their own dd. In hindsight, the broker nature in him certainly joined in on the shorting of SIRI, In hindsight also however, he saw the coming black cloud of the economy, the toxic finance deal to close the merger, and the obvious mountain of debt due. With that, I distinctly remembering him say wait until February or later before considering buying anymore SiriusXM stock. If you must watch the Cramer show, I have learned one must only listen to the nature of the teacher side of the madman.( i know, he also said it COULD be the next Google- “that’s entertainment”!
I, a suffering long, got in before I ever watched. I hope my averaging down in the meantime pays off some day?? I almost sold at a huge loss a couple times. GLTA longers!
Keep your fingers crossed for the 10-K filing to be decent…
frigginregan,
Bottom line: most people know virtually nothing about satellite radio. Many people who have it know very little. I mentioned it to a UPS guy the other day who actually was listening to it in his truck. He informed me that Sirius/XM had just gone bankrupt, and lamented how bad he felt about the news! Other people will look at me, inquisitively, and ask “Didn’t Sirius and XM just merge or something?” Then there are the usual comments such as “I just can’t see paying for radio”, this from people who have no basis whatsoever to evaluate satellite radio or ascertain its value to themselves or anyone else. UN-FUCKING-BELIEVABLE !!! It is a miracle that anybody has it, and it is a testimony to its greatness and its potential when you consider the inroads it has made with practically NO ADVERTISING AT ALL.
The American public needs to be assaulted with an advertising blitz, so they can get it in their feeble minds just how sensational sarellite radio is. We are talking about many millions of people here. Hell, if you could convince 10% of these potential subscribers to sign up, it would seal the deal. Who knows how big it could be if people….. know about it.
It just needs a buzz and don’t tell me all the people that just cleaned out satellite radio in Circuit City’s 4000 stores didn’t want it. They went through the stores like a pack of hungry wolves and why did they decide to get it now as opposed to the 6 mos the inventory sat in the stores ? Because the receivers were so cheap. It’s the price point that is too high right now for the general public. If they had the $, they could absorb the costs of getting them into the public’s hands. I’m sure everyone that bought these radios was fully aware of the subscription cost. I liked what I saw today in CC. A little sub bump.
People keep forgeting the extra time gets SIRI to cash flow positive and to the time when they can raise prices. Increased price goes directly to the bottom line. Almost all free radio is need BK meaning the talent is running away. Lastly this weeks Forbes has an article showing how real time weather maps including radar can be beamed to the car thru Sirius. The most important thing now to come from the conference call is quidence on subs now that the debt is behind them. Anything above 3 million by 2011 is golden.
s162,
That was great! This company has had to rise from the ashes over and over again, and if it ain’t dead yet…. that bodes well for the future in my opinion. You’re right; has any company EVER had so many detractors and opponents hell bent on destoying it? Well articulated, my good man!
Ok, good. The article you had to write. Get it out of the way, and lets move on. Thank you. I agree with sl62’s comments.
Im sure he feels better writing that than the other one. Lets leave it at that. Together we will move forward and spread the truth about SiriusXM. Lets get this stock going now.
Can anyone in laymens terms explain what EBIDTA means?
earning before interest..depreciation…taxes and amortization.
thanks BN for your response.
Earnings before Interest depreciation, taxes, ammort
lol
Oh Yes, I believe Mr. Matthews, Talk about eating crow, I have been such a cheerleader about Sirius service and the stock I felt like an A-Hole the past 18 months around some of my buddies. I know they bought shares in the 2-5 range and wanted to hang me. I hope they have hung on, bought more and kept believing. Sometimes are faith in certain people pays So far so good! Brandon, keep up the good work, and bye the way is Rite Aid going to make it, they keep opening new ones around Ct. especially in Fairfield county?????what the??
So, what are your predictions on the stock price over the next few weeks?
This may one of my typical stupid questions. Sirius Xm has several or more Sats. orbiting in space. Of course as these Sats. orbit across the USA they can broadcast to us. But when they r in the part of the orbit that they temp. can not broadcast to the US & Canada do they have the ability to broadcast overseas? If they can is there any talk of leasing out or getting the rights from other countries to broadcast content to some of these markets? Does anyone have info on this concept?
Sirius Hope
Earnings Before Interest Taxes, Depreciation and Amortization
going further its “operating cash flow”… its a great measure of the health of a service business thats not very capital intensive….
Brandon… you switch up like a $2 hoe. You’re for sale son.. Where’s your balls… Take one side and ride that side out… At least you’ll be respected for being a man…. Your last 3 posts have made you make yourself look like a straight up bitch.
Mel Karmazin, Leon Black, John Malone…. I’m all in!!!
“I’m the king of rock there is none higher
sucka MC’s should call me sire
turn burn my kingdom you must use fire
i won’t stop rockin’ til i retire”
RUN DMC
peace out…
been long SIRI for last 4 jointz….
For Neal Barkett, one word: geosynchronous
IPHONE APP!!
You forgot to mention that though the 40% dilution has not taken place as of yet due to the fact that preferred shares were issued and that is why the price was NOT affected by that action, is the real reason why the price did not drop in respect to the so called increase; because there was none.
Those preferred shares can be converted into common, but that won’t happen unless Malone is selling out… at a higher price; He’s no dummy obvious and why he is rich.
so let’s spin…but spin correctly.