SIRIUS XM Radio – Good Quarter, Average Call
When the financials of Sirius crossed the wires at 7:00 AM, things were looking pretty good in the world of satellite radio. Sirius had posted a good quarter, beat the street on many metrics, and the scaling of the business model seemed evident. The press even seemed impressed with headlines such as "Sirius Narrows Losses". The pre market trading was positive, and it seemed everyone was anticipating a call where investors could finally get more detail after 18 months of waiting.
Then the call happened. It was a very average call, and actually did very little to entice the street. Synergies of $400,000,000 were once again spoken of, but no meat and potatoes were given on the plans that would be executed to get there. After a drawn out merger process where guidance was scant and generalized, investors were in hopes of seeing something real and tangible. It unfortunately did not materialize in this call.
To be fair, the merger is new, but still, some point blank discussion was needed, and instead we saw blandness. Yes, there were promises about news forthcoming that will be released over the coming months, but this being an election year, and with a bad economy, people want to touch and feel their information.
Mel Karmazin is a brilliant business man. He has been the driver of success throughout his career. People want to bet on him, but the dollars are simply less discretionary than before, and like or not, people, as well as institutions are far more stingy when it comes to where they are putting their money.
I felt going in that this call could be somewhat of a foundation for the merged company to set the standards and stage for how the performance going forward would be measured. I was looking for a series of steps that would lead to the big picture. Steps that were track-able and quantifiable. Instead, I got simply the big picture.
Now, my frustration with the call does not mean that I, or others do not still see the big picture. I think most everyone sees the potential. What investors are trying to figure out is how rocky the road is on the way to the big picture. The company, in my opinion, needed to provide the "pathway" that gets us all to where we want to be. Instead of saying that there would be "savings on nearly every line item", we needed to hear a few of the bigger points where these savings are anticipated, and in what magnitude. We don't need exact figures, but instead a series of general ideas that outline the existence of a plan.
If I was grading the quarter I would give it a "B". The numbers were impressive enough that people could see demonstrated progress in the company. It was a good stand alone quarter, and the thought that the merger would bring about synergies made the future look brighter. If I were grading the call, I would give it a "C". There simply was nothing that carried excitement and anticipation after the call.
Perhaps we will see greater details in the coming days.
Position - Long SIRI
I’ll speak for myself in saying the stand alone report is not a merged report. My money will be placed on the merged companies metrics which I don’t have yet. The next quarter will be telling. Thanks
I heard two important items. No reverse spit because he sees it not adding value to the company. The second being that he is focused on shareholder and their disappointment. I want a complete plan presented, not bits and pieces. This is the last report of Sirius as a stand alone company. I’ve waited this long. I certainly can wait until after Labor Day for a detailed and attainable plan moving forward. By then they will have had a whole 4.5 weeks with XM’s books. A little patience here is called for.
I haven’t gotten a chance to listen to the call. So I can’t comment on it. However, what I find interesting is that the trading volume today was about half of what it has been these past few days. So, to me there appeared to be no sell-off, even though today was a very down day for the market overall. Yes the price of the stock went down, but there didn’t seem a big push to sell. Perhaps the low volume today was, on balance, a good sign?
I love it. Tyler You know as well as most that Mel is not one to give much away. He will let the final numbers be proof. I have to admit that I was afraid that he would follow his old montra of under estimate and over deliver. I believe the stand alone part of the numbers showed Mark W. he needs to be less pessimistic. I wean as Mel put it, if you see how well are last quarters have been going then you can be garanteed that the combined company will do much better. For me the stand alone numbers tell the story. They show a company as long as metrics stay the same as the last year they would be FCF positive very soon (after CAPEX). My god by this time next year they would most likely have positive EBITDA, on a stand alone basis with no synergies. So in conclusion I can wait. The only good thing about the wait now is you guys at Sirius Buzz have made it more fun, then before.
I agree with you COS, waiting for the after Labor Day meeting where they can speak with more facts than speculation and hope. Mel did say that there was nothing he saw in their books so far that made them be less positive about the synergies they see.
I believe they will also be announcing Howard being heard across XM by then, in addition some other pieces of content both directions.
ALL,
Some great views. I agree everything said. But in getting a quote for SIRI, on CNN home page, I clicked on a news article from Fortune. Wow, what a distortion and very negative outlook. Almost as if a NAB staffer wrote it. I have since replaced CNN with Google as my home page.