Sirius XM Should Benefit From Economic Turnaround
One headline today was that JP Morgan Chase posted a better than expected profit. Another was that housing starts are not as good as expected. The economy is not yet recovered, but at least now there are sparks of good news that seem to give people hope that things will get better. The question is how soon?
Sirius XM Radio has a core group of loyal subscribers who have seen the value in the service, and simply will not give it up. It is these subscribers that will build the foundation of the success of the satellite radio business model. Yes, a tough economy makes it difficult to bring new subscribers in the door, but the loyal group of those that simply can not be without the service will continue to grow.
Across many business sectors, the gears of the economy seem to be trying to start again. Things in motion tend to stay in motion. Things at rest seem to stay at rest. There was a period not to long ago that everything ground to a halt. Getting real movement again will be a process. In my business I have seen projects that went on hold a month ago seeing new signs of life now. The scope of those projects has been scaled down, but what everyone seemed to recognize is that sitting still was not a solution.
For Sirius XM Radio, the current plan has to be continued synergy savings, scaling back, and maintaining a level of service that keeps the core happy. As the economy gains steam, so will Sirius XM Radio. The company is in a careful balance that requires a level of cautiousness. That being said, there are several inexpensive things, such as twitter and facebook that the company should embrace. The company should give serious consideration to expanding their on line presence, and creating a social network that allows people that are not yet subscribers to experience the product. Three of the top 10 downloads on Blackberry App World are free music services (Slacker, Pandora, and Clear Channel’s IheartRadio). Sirius XM needs to gain this type of exposure now in order to best benefit from an economic turn around.
When the time comes that car sales improve, the bad mortgages are flushed out of the system, and people have a bit more confidence, a service such as Sirius XM will benefit. Especially if they lay the foundation now. The company is on the cusp of getting out an application for the iPhone (albeit later than many had hoped for). The company has the potential to combine merger synergies with Liberty Media synergies. Sure there will be some bad news. Investors should not hold out high hope on the subscriber numbers for Q1, but then again, it would appear that we have graduated from that type of thinking. As long as the important metrics such as cash flow, ARPU and SAC are in line or better than expected, the company should be able to deliver shareholder value.
The turn around of the economy will take time, and investors may not see immediate satisfaction, but it appears that Sirius XM has the potential to be in a good position to respond to better times ahead.
Position: Long Sirius XM
what is a “core core”?
the die-hard inner core, I suppose…………..
Tyler, good stuff! I think u nailed it. It’s not going to happen overnight, but I really do believe it is starting to happen. Little by little as Sirius Xm gets around the bend and away from all the media negativity the synergies of the hard fought merger will rise like cream to the top. I remember back during the dot com. craze, one analyst actually saying that it was over for stocks like Proctor & Gamble (who needs staples we have computers & the internet)! As I’ve stated before we will look back and see that the Satellites will just be one of many ways to get this “great content” out to the consumer. They will be the recognized as the King Provider of Digital Audio Content!
The release of the iPhone app should help sales a lot too.
Certainly businesses that weather the current economic storm will be well postioned going forward when the recovery has actually taken place. The economy is beginning to show signs of life across many different sectors in the country, and this will bode well for SIRI. The point made by Tyler of things in motion tend to stay in motion is a great way to look at the present situation, and businesses are aware that to do nothing is not an opiton. Great article!
Long SiriusXM
Have heard or seen nothing from Melvin Karmazin which would lead me to believe that under his continued tenure at Sirius/XM, anything but mediocre performance can be achieved.
A valid question is this: how would Wall Street/Investors re-act, should Melvin announce he is resigning and retiring?
Would this be a boost for the company, share price, outlook for the company, or more of the same?
Max…
I don’t believe any benefit would come from Mel resigning at this point.
Like many that have posted on here, I am just as frustated with the slow marketing for the I phone, and the same things that Tyler related to in his well written article.
I think now Mel and company can focus on the future and I believe that finally we will see Mel’s experience start to benefit the company that many of us expected before the FCC and tight money Re-Fi
boondoogle.
imho
vaporgold
If Mel leaves, I will buy as many shares as I can. There is not another person in this world that could sink shareholder value like Mel has.
Love the twitter and facebook suggestion, I think I said this 9 months ago and I’m sure they will hop right on it… maybe, Q4 2012.
iPhone app, still not out. What a bunch of clowns. The app has taken longer then the merger!
you know
Until Apple puts out the Iphone 3.0 upgrade, all the company can do is wait!! Apple says upgrade out in summer of 09!!! I believe that the Sirius app would not be beneficial until Apple upgrade is in place. Without a hard release date, Sirius can do absolutely nothing!
We now know that rocks are hard and water is wet.
You actually wasted time posting that a company would do better during an economic upswing.
Wow!, I bet that was a hard one to figure out.
Great article Mr. Obvious.
Tim…..
While you may feel it is obvious, other do not. The article is also about marketing and things the company can do now that they will benefit from later. Again, it may be obious to you, but some do not see the curret activities as enough.
Your statements and sarcasm show that perhaps some points of what was a straight forward article went over your head…..but then again, that is not obvious to everyone
…………..doesn’t sound like ‘Markoski’ is convinced of anything positive in this forum, at least not as of the present train of thought…..But………………………..
He just may have a majority handle on things regarding the sentiment for the future of this company, if I may, because as of the end of March, 09, the short interest in SIRI has INCREASED!!
Not gone down as many of us had probably thought……….so it would appear that the deck is still piled high against us irrespective of ‘current upward’ motion……………or so it seems!
To Wit: FACTBOX-Biggest changes in NASDAQ short interest
FIVE BIGGEST INCREASES:
Sirius XM Radio Inc (SIRI.O)
3/31/09 181,243,884
3/13/09 161,851,340
+19,392,544
11.98%
Or is this ‘old news’???
Draland
You do know that when Mel did the “toxic financing” he lent 200M shares out to bondholders just for this purpose. So as long as the short interest stays below 200M, there is nothing really to worry about. Actually, there is a max of I think 263M shares that could be out there soley for the bondholders to short Siri to protect their investment! As a shareholder, that sucks…but the stock has rebounded significantly, even with the high short interest!
thanks for the info !
I would love for Sirius-XM to succeed.
In order for that to happen, it should be obvious that current management is incapable getting this company over the hump.
Until they address the VERY REAL customer service, hardware and mobile device strategy issues, it will stay a penny stock.
Mel Karmazin and his entire management team need to be replaced.
Tim
Changing management at this time would set the company back even further. I agree that they suck!!! But I believe that many of the Wall Street types, analysts, MSM would absolutely kill this company. Present management is very slow to respond to changing market conditions. I feel that with Malone on board, they will have no choice but to pick up the pace or will be forced out!
You have a point here.
However, it can also be said that the shorts are still dominating because the markets do NOT have faith in this management team.
Tim, I’m sorry I can no longer stay silent…. Your thoughts of replacing the entire management team officially clasify you as an IDIOT…. sorry…
I couldn’t care less what you think.
The fact is Sirius-XM management is incapable of dealing with the serious problems that face it.
If waiting for iPhone OS3 is their entire Mobile strategy, they should be escorted from the building immediately.
There is already an XM app for Blackberry but Sirius-XM has done NOTHING to leverage that for both Sirius and XM feeds.
Try reading the forums here for all the nightmare customer service stories.
They have done NOTHING about the abysmal quality of the actual radios used.
I could go on ad nauseam, ad absurdum.
Now, tell us all why I’m the idiot and YOU are Wile E. Coyote, Super Genius.
You’re nothing more than an uninitiated fanboy.
Yikes !!
LOL………………
I’m sure I am not the only one who is noticing how much Sirius is advertising on the web. They are all over Yahoo and AOl for months now.
sxm
I have seen quite a bit of SiriusXM on the net. Only problem is that there is nothing to “wow” potential new subs. Internet adv is cheap and covers the masses. We need some direct marketing to a targeted audience to really make an impact.
Just a reminder.
It appears that someone else isn’t too bullish on Sirius-XM either.
https://siriusbuzz.com/why-sirius-xm-will-not-survive.php
Good article. Another potential marketing strategy to consider: Sirius/XM has a large number of devices that are in the market and not activated. These are devices installed in new vehicles and the subscriber didn’t renew (I believe that the churn rate is around 80% for this segment of customers)… A quick look online tells me that there are about 8M new cars sold in the US per year. That’s a tremendous number of devices just sitting there not generating any revenue. If Sirius/XM offered a basic service (like the basic services available on cable) for a very low monthly cost, they could leverage the existing infrastructure already deployed with very little capitol outlay. Again, I don’t know all the numbers, but something like 15 stations for $5 per month would pull in some new revenue and maybe just the shot in the arm they need…
Why is no one talking about the 3-day run the stock has had. It is up around 18% percent today, with it topping out around .50 cents. Alot of people are feeling pretty good about the company it appears. May be I’m not as smart as all of you experts, but I have made a 325% percent return on my investment since mid February. Long Siri
As one of the long term XM subscribers(since Feb 2002), it’s pretty hard to really cheer the merged company on.
Face it, the quality of programming has declined. I never thought that I would post the following statement:
“I FIND MY SELF LISTENING TO SAT-RAD LESS AND LESS AND STREAMING ON MY HOME COMPUTER TO SOME GREAT INDEPENDENT FM STATIONS MORE AND MORE”
The constant yakking and piss-poor programming on “Classic Vinyl”,”70’s” and sadly even “Watercolors” continues unabated. The total collapse of good uncensored comedy on the old uncensored “XMComedy” replaced by that embarrassment “Rawdog” is unexcusable. Let alone the truly great techno channel “The System” replaced by “Area”
Core subscribers????
I truly am asking myself: Will I renew next year when my multi-year subscription expires?? There’s a good chance I won’t.
Another sure thing: I don’t tout sat-rad to associates like I did prior merger.
Now what do you “EXPERTS” make of that?
XM subscriber since Feb 2002 (Skyfi generation 1) & stockholder who bought at around $5.00/share. Don’t think I will ever make my money back
Mel & his minions HAVE GOT TO GO!!!!!
If you are a “core” subscriber(like myself)this is it in a nutshell:
If you are a “core” subscriber ask yourself these simple questions:
1. Do I enjoy listening to the merged sat-rad companies like I did prior merger? My answer: NO
2. Am I satisfied with the direction the post-merger programming has taken? My answer: NO
3. Do you tout or talk as enthuastically to friends or co-workers about sat-rad like you did a year or two ago? My answer: NO
4. Do you think the management of the merged company takes its “core” subscribers for granted? My answer: YES
5. Do you trust the management of SiriusXM to be truthful & forthright? My answer: HELL NO!!
I rest my case.
great article. I bought $75000 worth of SIRI at 20 cents a share on march 13th in a simulation for my finance class. 22% jump today, now we’re at $.50 a share? Good return? Do the math