Sirius XM Radio Is Stuck
We have all heard Mel Karmazin state that more detail regarding Sirius XM Radio would be available after Labor Day. This left the window open for speculation, rumor, and simply stated, another period of time where Sirius XM radio stock could blow with whatever winds the marketmakers, a television host, or even an analyst wanted. Even hot tips whether accurate or not are difficult to prove one way or the other, leaving more frustration.
Sirius XM Radio is stuck. For sector followers this is nothing new. However, knowing it is stuck, and knowing that it is being traded in a range does not ease the frustration. For the past week the stock as bounced around a bit, but accomplished nothing. Longs and shorts are not seeing any real traction. The stock is stuck. How long it will remain in a channel is not yet known, but the next major activity is.
Labor Day is this Monday, and it is then that the company will begin to roll out more detail. This will be something that is hopefully more concrete. Something people can sink their teeth into, and something that will give the street a sense of direction with this equity.
There are two aspects that need to play out in the coming weeks:
1. What consumers should expect with the merger. This aspect is important, because there is still a lot of confusion out there with reference to legacy receivers, oem receivers, Best Of programming, A-La-Carte receivers, and even how branding will happen. Sirius XM Radio needs to put all confusion to rest. Not all of it has to be in a Press Release, it just needs to be available. People with lifetime subscriptions wonder what happens now. People with one base service or the other also have questions. Retailers do not know the answer, so people need to have a place to get that information.
2. What investors can expect. How will churn be counted, how subscribers will be counted, what is the status of coverts, debt, and satellites. What synergies are expected to deliver and in what time frame. Investors need to see the final goal, and some milestones on the way to that goal, but perhaps what is more important is getting everyone on the same page as to how to look at this equity.
Until there are some answers to questions such as this, this equity will be stuck. Jim Cramer speaks of additional converts being needed prior to February of 2009. The last thing this equity needs is yet another overhang. The fact of the matter is that there are many financing options available to Sirius XM Radio. Converts is not the only answer, but the street is not aware of that. Jim Cramer is pounding a drum, and until concrete answers are available, that drum beat is hard for people to ignore.
While is is difficult to digest, patience is the key word no matter what your current position. Patience is needed until there is a concrete and demonstrable change. Once that happens, this equity can react on something other than television, market makers and speculation.
Position – Long SIRI
Tyler, regarding aspect #1: I was at Best Buy yesterday and observed that Sirius and, separately, XM products and service were not in plain sight. The aisle they were on is in a back corner of the store, and the shelf they were on faced a back corner of the store. And, it was a poor display generally. If the new Sirius XM wants to sell its products and attract more subs than the company had better get a little face time with its B-to-B partners and arrange for better exposure of its products and services. Also, at a local Ford dealer the other day I noticed no display whatsoever. Again, brand, product, and service exposure matter. Regarding what investors expect, #2 above, your input and Brandon’s and that from several others helps us understand how the stock appears to get manipulated. On another blog I read about how someone at a powerful level appears to be shorting to accumulate at a lower price then repeating doing so again and repeating the cycle. What will it take to change the status quo and get the stock unstuck?
Yes, cos1000, Sirius XM had 18 months to prepare all of the items I discussed for introduction at the time of the merger’s approval. Typically, companies don’t wait for approvals before planning their ’synergies’ and how they’re to work.
If a company’s new services/products from a merger aren’t ready to go on Day One, they’re likely to draw questions from investors about the management’s fitness and direction, sinking investor and consumer confidence in the process. A company’s stock price is a direct reflection of its investors’ confidence (or lack thereof) in the management, and it’s my belief this explains what’s happening with Sirius XM share prices. Karmazin & company have distributed a lot of sunny side up rhetoric but haven’t been so forthcoming on details. I think that spooking a lot of people.
As far as the technology of satrad, I’m pretty comfortable with my level of knowledge — having worked in operations and/or business development in the telecom and cable TV industries over a decade. My background in broadcasting is more extensive. And in the interest of full disclosure, I am an XM subscriber, but no longer a shareholder (having liquidated my shares long ago).
I’m more concerned about the industry of satrad than the relative financial success of a particular company. I’ll continue to be a critic of the Sirius XM merger because, IMO, it is a (net) losing proposition for investors and consumers alike on its present course. So, unless you’ve got some genuine inside baseball to toss out here from direct, first-hand experience other than playing e-trader, I suggest you calm your silly ass down from calling people ‘idiots’.
Holy moly people it has only been amonth since the merger, give them some time. I cant believe some that think most everything should be worked out. Look at many mergers that have taken place, things dont get worked out for 2 or even 3 quarters or more. I think Cramer was right that the next 2 quarters will be bad for SIRIXM not for his reasons but for the reasons I have already stated. I to cant believe there was not some kind of bounce off the merger. That if anything proves the stock is being played with. That can only happen for so long before the metrics even show the less informed of us that the company will be sound. As for the remaining financing, while it may not be favorable to SIRIXM it will get done. I find it hard to believe any of the banks that have given them money so far, are willing to lose what they have given so far, when the company will be well on its way to financial security, by the time the next batch of financing comes up next year.
I would suggest that if people are already sick of the wait, that they should just sell now. I would also suggest you not look at the stock again ever after you sell, because that will just make you sick that you were that patient in the first place.
PM – You are so right!
The last time I was in Best Buy, if I hadn’t wandered into the most remote, dimly lit far corner of the store, I never would have noticed ANY evidence whatsoever that Sirius/XM products were available. This sad state of affairs, in the countries largest electronics retailer! This shows a lack of attention to detail by Mel & Co., and they should be held directly responsibe. Is there any communication between the retailers and the company? Evidently not much, and the abysmal performance of retail has a direct correlation to this kind of indifference. Boys, you better get your act together, and I mean NOW; keep this up and you are going to blow any chance of ever getting Sirius/XM from sinking even further into oblivion. Do you here me, Mel? Not in 5 minutes…… NOW !!!!!
Listened to AM radio this Saturday to catch a college football game. bDuring the game a commercial for a XM channel must have been mentioned 10 times to listen to college football games . Interesting
Don’t jump all over me for this but if sat radio was generating higher revenue for retailers then the radios would be front row center. It’s not like Mel decides how the store gets laid out.
MIB, I take my statement back. It should not have read you “uninformed idiots” but rather you “well informed idiots” that are trying to take the company down and shake investor confidence in the management of this company. You compare this merger to others that have nothing in common with the rigorous and highly confidential nature of the DOJ and FCC Process.
You tell us that we should not listen to what Mel says but what the company does. Your preaching to choir with that advice. We all know that actions will speak louder than words. Now Mel, who you say I shouldn’t listen to, explained that until the day of / after approval the DOJ forbid access to each others books. Synergies were planned but couldn’t be actualized until after the merger. Consolidation of management, programming, and development of simulcast for the Best of Both is happening as we debate the issue.
I know that they are already a whole 32 days from the approval process and we’ve been in a information black out, but not listening to what Mel says could lose an investor a lot of money when he does decide to speak. So I will gladly calm my silly ass down from calling people idiots when they start looking at the realities of this merged company.
Is there debt to be refinanced? Yes, but not insurmountable given a reduction in future expenses and an increase in overall revenue opportunities. I don’t have to be an insider to have Common Sense.
Your broadcasting experience is not of any real significance here, with the NAB being the biggest opponents to this merged company. Experience in transitioning executive and operational management, making operational sales and marketing plans, and the bringing together of two dissimilar space based technologies so that they can run “best of both programming” to all of their existing subscribers with their existing equipment is the experience that’s needed.
Interoperable radios will be ready for the retail market within 9 months per FCC and Mel says probably sooner. The FCC delay, not a poorly managed company has the OEM channel waiting until 2009 for the interoperable options. What’s to say that delaying their roll out in OEM doesn’t give them a better opportunity in the Retail channel while they work the bugs out.
You say your “more concerned about the Industry of SATRAD than the financial success of a particular company”. Sirius XM Radio is the entire SATRAD industry now that they’ve merged. Only their financial success matters in the SATRAD Industry now as they compete with other Media companies in that sector. Oh yeah, for the purpose of full disclosure, I am long Sirius and have 3 subscriptions on the “Family Plan”.
cos1000, That cos10000 on Seeking Alpha is really VicDave. Sad isn’t it. I just send you a private message on it.
Thanks John, if you’ve been following the posts there you know that he’s been had. Unbelievable.