Sirius XM Trades Under $1.00
The stock price of Sirius XM Radio have hit levels below $1.00, indicating yet another downturn in the equity. Analysts have begun to weigh in on Sirius XM, and while most have maintained their price targets and outlooks, the pessimism on the street continue to weigh heavily on the stock.
Yesterday we highlighted the opinions of CITI and Goldman Sachs, and today J.P. Morgan, RBC and Stifel have added their two cents to the pool.
Barton Crockett of J.P. Morgan, concentrates on the financing that will be due in February of 2009. He feels that the company cash reserves will not be able to simply buy out the debt and that Sirius XM will have to test the challenging credit markets. Crockett maintains a “Neutral” rating on Sirius XM radio, and highlights the debt, as well as cautioning that the OEM and retail channels are weak.
Also adding his opinion was David Bank of RBC Capital. Bank is still pegging Sirius XM as Sector Perform with a $2.00 target, but seems cautious, pointing out the weak auto market, weak retail, and the refinancing overhang. The analyst also commented about the lack of long term “visibility” on satellite radio.
Kit Spring of Stifel had a bit of a scary edge to his report today. While he maintained “Buy” rating on the stock, he adjusted his price target by 33% taking it from $3 to $2. Spring says that company guidance was negative, and adjusted subscribers and financials down for 2008 and 2009. The scary part for investors is that Spring noted a downside potential of “ZERO” if the company is unable to get the some of their debt refinanced. Spring does feel that the company should be able to obtain financing, but the debt overhang seems to be a heavy weight on the stock.
Clearly current prices have people scratching their heads and wondering what the best position is. SIRI for under a dollar seems like a bargain to some, but others still see more of a haircut in the cards. What everyone needs to understand is that SIRI is a speculative stock. There are issues that the company has to deal with, and an economy that breeds pessimism. Each investor needs to consider many factors, and their own trading style before jumping in or getting out. This company needs time. The question is whether the street is willing to give it to them. Should the company announce a resolution to their debt issues, the biggest overhang can be removed from the stock.
Position – Long SIRI
Investor, you think this is bad, you should have been there when the DISH/DTV merger was not approved. For the ones that stuck it out, the gold at the end of the rainbow was there.
Karmazin’s money
http://www.businessweek.com/19.....623001.htm
Good Background story on Karmazin. In 1999, old Mel was worth at least $400 million.
”He’s very frugal about business and even in his own social life,” says Kluge. Though Karmazin’s stake in CBS is now worth close to $400 million, says Kluge, ”he acts like it’s $40,000.”
Shark I agree with you. When I made a decision after the call to hold my position, hearing that he was committed to no further share dilution, averaging down is what I am doing.
I guess this is what capitulation looks like. When the last hangers-on give in and sell. I don’t begrudge them their fear, these are nervous times. This is where looking at the metrics over the years, looking at the numbers and how ridiculous they were presented yesterday, gives me the strength, and maybe stupidity, to hang in there.
John I never though I could buy a hundred shares of this stock by robbing my penny jar, but here I go. LOL
From a Newsweek article from 1999:
”He’s very frugal about business and even in his own social life,” says Kluge. Though Karmazin’s stake in CBS is now worth close to $400 million, says Kluge, ”he acts like it’s $40,000.”
Investor, I have to say this, because that is who I am. If people who sold, would have listened to me back then then, they would not be working for a living now.
Screw investing in Sirius, i need to get my hands on Cos1000s penny jar. Mel is worth 200 million, that is crazy, i was worth 10,000 until i invested in Sirius, now i’m down to 3,000. I’m just gonna wait it out, LONG SIRIUS!!!!!!!
cos1000, That a boy, I dont think you will be sorry, But as I said there are no guarentees. We just have the odds, lodgic and common sense on our side.
By the way you never got back to me on the message. Did you get out of the shipping sector at the end of July or early August remember when I said that in May. It happens almost everytime.
If Karmazin cashed out his 400 million in 1999 and earned 10 percent interest on it over the past 9 years, he would have over one billion dollars today.
Karmazin was not kidding. He could loan SIRI his own money.
“cos1000, 19.5 million X 1.67% (avg. selfpaying churn) = 325,000 a month X 12 = 3.9 million lost for the year.”
============================================
OK ,I’ll buy into losing 4.0m subs for 2009
to churn that leaves 15.5m subs. Now add in
the 2.1m per QTR = 8.4m new adds
EQUALS YE 2009 15.5m + 8.4m = 23.9m
Note: 2.1 million was what SIRI and XM had
in the last miserable economic QTR !!!
John, I agree and churn # could be higher because it average subs for year around the 20.5 plus million. Unless the cross content lowers the historical sub % loss.
This market and stock price has made me so dam pessimistic that I can’t stant it. Or should I say CAUTIOUS.
If OEM drops further from projections and they can’t add at least 2.3 million in retail next year, then another miss on the 21.5.
John yup and was glad I did but, guess what I bought my last 10K shares of Siri with. You might say I’m a little one sided in my portfolio right now. I’m still keeping an eye on DSX though because the dividend is great.
horsecork, I read that in another article also that Mel was saying if he had to loan SIRIXM his own money to get by he would. I dont know if that is what Mel said or not, now going off what Brandon has said. That is the way the author of the article took it though.
Again it blows my mind that Mel used the language he did yesterday.
Because he did we got DOZENS of negative articles that wrote things like this:
“Shares of Sirius XM Radio Inc. fell sharply on Wednesday after the satellite radio company forecast a wider loss and slower subscriber growth for 2008 than analysts expected.”
….written over and over again feeding the fire and downward spiral today.
MEL isn’t stupid. He HAD to KNOW that words have power. That this was the BIGGEST CC of the combined companies short life so far….and that analysts and bashers were waiting to pounce on EVERY WORD.
SO….WHY the FRIGGIN HELL did he say his numbers WERE VERY VERY CONSERVATIVE…..and NOT JUST GIVE WHAT HE THOUGHT WERE THE NUMBERS INSTEAD??? WHY not just BE POSITIVE?? I mean if he really believed the numbers were VERY VERY conservative…JUST SAY HOW POSITIVE!!!
We needed POSITIVE words now. There was NO reason. NONE whatsoever that made lowballing a GOOD strategy today.
I’m not saying that the shorts wouldn’t have continued bashing….but Mel threw them a FRIGGIN BONE with his less than enthusiastic tone and words.
How many FRIGGIN bones is Mel going to throw the shorts way at the shareholders expense? First the “UGLY” refinance to close the merger….and now THIS?
Again…I’m still in shock at the INSANE lack of judgement he displayed today. UNBELIEVABLE.
It’s hard enough dealing with the bashers and shorts and bad economy and uncertainty. DON’T THROW FUEL on the negative fire! ESPECIALLY when you BELIEVE the numbers should be MUCH MUCH higher. But what the hell…you lowball it because WHY? LOL….Mel…I love ya….but that was the most RE-FUCKING-TARDED BONE HEADED move I’ve ever seen.
cos1000, I would say buy DSX and NM now with it being at 21 and 22 but I am a little shy until I see what the next months bring. I know I said not to buy until Jan/Feb but 21 and 22 is very low. I would say it cant get much lower then again look at SIRIXM.
WL, while I do think the number Mel gave was conservative the number Cos1000 gave was to much. I was just being reasonable. I never said what the gross sub adds would be. As cos1000 can tell you. I never get to far off the reservation and that is why when I say something is off and does not make sense you can believe it does not. By the way those figures Mel gave while some feel they were conservative that is the way Mel has always been and will not change. He gives numbers he is absolutly positive he can make even in the worse case. I have no dought that he knows without a dought SIRIXM will have 21.5 million no matter what happens. That is just the way Mel is, and always been so why this is coming as some kind of surprise to people is amazing to me.
WL-
you are overprojecting since the churn of 4 million is paying subs who quit service. You are not adding the OEM promotional that do not ever sign up. If you look at the gross vs net for Sirius and XM last 2 quarters, the net is approaching the 30 % of gross. These #’s are all in churn #’s.
Just look at Sirius last quarter. They had 1 million gross and net of 280k. It’s gotten progressively worse for them. XM actually stabilized and improved slightly in previous quarters.
This is where my problem is coming from. I always knew this and was very concerned, but thought I could get out in time with a merger pop.
Not such a big deal if merger approved 7 months prior and they and time to deal with debt properly and it’s just gotten worse since July 28th.
John I agree it looks low, but China is living off inventories right now and the rates have taken a dive. History / charts do show these shippers move quickly up when the rates improve. I guess the fear is a global slow down. I don’t think waiting is a bad idea here.
Investor, the above comment also gos to you while. You are as guaranteed as can be that the subs will come in at, at least what Mel says they will and no lower. The fact that people are missing is the revenues are still way up there and growing. I believe Mel thinks he will be getting alot more money from existing subs for the revenues to be where he thinks they will be. That is the part that did not JIVE with me unless this is the case, but who knows.
I did the numbers using 2.0 churn and
using Sirius/XM gross add numbers from
last QTR, which doesn’t include.
a) higher oem penetration for 2009
b) lower churn for additional sub packages
available at a cheaper price
MEL , lowballed to much and the street is
looking for any excuse to bring it down
to the price they want to pay for the shares
going forward.
jan 19500 500 20000 -400 19600
feb 19600 600 20200 -404 19796
mar 19796 800 20596 -412 20184
apr 20184 600 20784 -416 20368
may 20368 600 20968 -419 20549
jun 20549 800 21349 -427 20922
jul 20922 600 21522 -430 21092
aug 21092 700 21792 -436 21356
sep 21356 800 22156 -443 21713
oct 21713 700 22413 -448 21964
nov 21964 700 22664 -453 22211
dec 22211 1000 23211 -487 22724
8400 -5176
cos1000, I still think the extra inventories at the ports are due first of all to the rail systems being wacked from the earthquake and then from the olympics. We will see though in the coming months, how much of that is drawn down.
cos1000, by the way that is the reason I am confused on weather it is a good time to buy DSX at 22 or 23 even at this time in the year. While that is a good price the time of the year is a bad time for shippers, but that may not play out because the china market was prematurely subdued by the two things I said above.
WL, the fact is the first have of the year they only got 1.2 million net subs the 3rd quarter is always bad for net sub adds then we have the great 4th quarter. Now if you go back and look at XMSRs 4th quarter of 2007 it stunk and while SIRIs was better it also was not even close to as good as many thought it should be. I believe Mel is going off a projection of how sales have been going over the last several quarters. He sees subs have slowed and if you go from years prior and graph them it shows about 2 million subs for the year of 2009. Does it figure in the effect of new talent or new products? No it does not but that is the conservative nature of Mel. Do I think they are low? Yes I do also.
How can the fact be missed so consistently, by so many. It has nothing to do with “refinancing” the debt. It has everything to do with making a fucking dime. People don’t mind lending you money if you’re not going Chapt. 11. The “financing” is yet another boondoggle.
PS. It’s over.
Let’s debate it down to .05 eh?
Plowboy, that is correct, so how is it they got the financing to get the merger done in the first place. If what you were saying is true then they would not have gotten it.
John,
The financing was done at ludicrous interest rates and terms. They can’t afford that when refinancing again.
WL – you are still not counting deactivations from OEM promotional periods. This is included in Sirius All-in-Churn% of 2.8%.
On the positive side there are subs from some of XM’s OEM deals that are not counted as subs until they decide to stick at end of promotional period, so you get some surprise subs from previous OEM quarter. End of 2nd Q, XM had ~ 850k in promotional period, so this helps.
It will be difficult to measure any metrics until you have ability to compare 4 quarters of a merged entity to the following 4. Especially with Best of, ala cart & eventually interoperable radios.
If they make it through 2009 without going belly up, they will be OK, but still will be hard to grow the net subs 10%/year unless OEM’s start to ramp up 10%/year themselves and churn % slows. This could happen with cross content, special radios.
But what will stop the stock from dropping till they stem the losses. I have a bad feeling it will be under continued pressure and what does that mean for financing terms ?
I’ve got a theory that I hope never comes to light:
Mel has said time and again that there will be no reverse split. Have any of you wondered why he was negative when he spoke of future 2008 and 2009 subs.? Why he “inadverdantly” lowered guidance and caused the pps to tank?
Suppose the price stayed below 1.00? Mel would have to do a reverse split in order to maintain Nasdaq listing. I’m sure he will be very, very sorry for all of us, and say his hands were tied and he had no choice.
Mel is a slicked up used car salesman and will surely screw retail investors if it came down to it. I got out without a loss on this tank, and accumulating now under a buck, but have a very itchy trigger finger and trust Mel as far as I can throw him
Forget about a reverse split. Mel won’t do that, because with this economy and the outstanding debt still remaining, the shorts would simply respond by BASHING the stock right back down below $1…so it’d be STUPID to reverse split.
WHat I am worried about is Mel throwing in the towel and filing chapter 11…wiping out ALL debt and ALL us shareholders in the process.
Think about it. That would INSTANTLY solve all of SiriusXM’s problems.
My question is WHAT protection do us shareholders have? I know usually NONE in such cases since we VOTED for the merger.
But can’t a case be argued that Mel broke our trust by CHOOSING to cut an UGLY merger deal that all but ENSURED the stock tanked and thus enabled Mel to file for chapter 11?
I know that’d be hard to prove, but what if Mel struck such an UGLY deal on purpose? WHat if it was his plan all along? I mean he told us he HAD to sign off that night…but DID HE REALLY? Wasn’t it a choice? And WHO exactly would have blocked the deal if he had waited an extra week or two or three? I mean SERIOUSLY. THere has to be records on all this. WHAT judge was he alluding to that would single handedly be able to delay the deal even more?
We know now that the FCC would have inevitably APPROVE the merger….so WHY DID MEL have to sign such an UGLY DEAL THAT NIGHT???? AFter waiting 18 months??? He couldn’t wait anymore for more favorable conditions?
I am beginning to think of a HORRIBLE conspiracy. I know it’s the anniversary of 9/11…but unlike that conspiracy, THIS one is actually PLAUSIBLE!
What if Mel’s plan all along was to create an even worse environment for the merged company that would ALL BUT ENSURE what is happening now? So he could then make the case LATER for filing chapter 11 without too much resistance by the government!!!
THis crazy theory also kinda explains Mel’s BIZARRE performance at the CC on Tuesday don’t ya think? Now it makes perfect sense why Mel LOWBALLED his guidance….KNOWING it would SLAM the stock further.
OH MY GOD!! I think I’ve uncovered the TRUTH!!!
LOL….GOD I hope not. But it’s not paranoia if it actually HAPPENS right?
Tyler/Brandon –
I have sent 2 seperate posts inquiring about what SIRIW is and they both did not show. I sent 2X because the 1st didn’t show. Is it because i put a link ?
Anyhow this SIRIW questionably dropped from 2 to 1.25 yesterday and now .50 today.
What is this & how does it relate to SIRI and trading or shorting?
Seems like something fishy going on..
Friggin –
You want to talk about paranoia, call up SIRIW on AOL stocks and then look at the end of the link. It has /nab ????
I don’t get it. What is SiriW?
Stock symbol, that’s what I’m talking about. Look at it on aol stocks and then go up to link and go to the end and you will see “nab”
I dug deeper and found this on GOOGLE about what SiriW is:
“This looks like a bonus warrant. It is a stock “sweetner.” The buy in
opportunity has an expiration date. Up until then, the stock may be
purchased. There are not shareholder rights associated with the stock
and no dividends due to the holders of such stock.”
So now you know. It has to do with “warrants”. As Officer Brady from South Park likes to say, “MOVE ALONG! THERES NOTHING TO SEE HERE!”
Lol.
Friggen –
Just getting paranoid about the conspiracy.
Thanks.
Right there with you friggin on everything. Often contemplate if Mel has any compassion for the financial disaster hes put his shareholders in???????????????????
Took me better part of an hour to wade through all the posts above. Oh, to be able to do a Vulcan mind meld with Mel right now….
Hey Plowboy, I don’t know if I agree with you here… the last time Sirius traded like this (under $1) was the LAST time that Sirius was working on their debt refinancing at the end of 2002 and into 2003. Sirius traded well under $1 for 60 days in 2002, then and addition 90 days a bit later in 2003. However once their debt was completely refinanced… the stock rose.
IMHO, I think we’re seeing history repeat itself. I could be wrong, but I’ve seen this before — in both XM and Sirius at the end of 2002. You get this crap taken care off and focus on operating and controlling costs, I think the pps will take care of itself.
——
Mel doesn’t give a F about common shareholders. It’s obvious. Something doesn’t smell right. I’m leaning towards conspiracy theories. He seems to be want the stock down. but why? buyout? i don’t effin know… F!
PPS hit .39 during wk of 3/3/03.
OK, so looking back to the worst tank period is a downer. Well on the caffiene side, how about this little gem in Forbes Market Scan earlier this evening:
“Contrary to investors, J.P. Morgan analyst Barton Crockett remained cautiously optimistic. “Near-term headwinds may continue to weigh on the shares,” he said. “Longer term, we expect the company to be able to refinance its debt and for earnings to ramp sharply.”
Anybody miss that “ramp sharply” part? –WAY long SIRI
As many stated the debt holds the key to pps. Hey Friggin. I read with interest the conspiracy point of view. However, most retail shareholders own the stock because we like the product. Just like the books say to do. Invest in the products you like. So……………If Mel screws the retail guy. He’s screwing the subscriber of the service. I guarantee most shareholders have a sat radio. It’s a losing game for Mel to continue to post a stock price on the ticker each day that we are posting. He has to know that. Eventually we will all get pissed off and cancel our service.
That speech has proven what a donkey, Mel is. What do we do with donkey’s? We put them out to pasture. Mel should be put out to pasture for giving such an idiotic speech at a time when the Street is looking for any excuse to hammer any stock into oblivion.
The Street has hated this stock since the merger was approved and more debt was issued, as far as I recall.
I hope Mel has the connection to refi some debt at some very favorable terms, or this stock will stay below $1 and get delisted from NASDAQ.
But this stock looks like it’s drowning. Where’s the incentive for someone to loan money to company who’s stock price has fallen to 40% of what it was when the merger that was supposed to save them was completed and in such a short time?
There is no incentive, and much less so after Mel’s stupidity conttibuted to a further collapse in stock price.
I call upon Mel to RESIGN.