Why Is Sirius XM Stock Going Down?
Let me answer this question, before you ask. A lot of people are under the impression that SiriusBuzz is some sort of Sirius XM stock pumping site. Nothing could be further from the truth. In fact, I recently suggested to all our readers that they should put stop losses in at 1.20-1.24 as the stock had broken yet another bottom. To those that listened, congratulations!
To those that did not and want to know what happened today, it can be summed up simply. Mel Karmazin, in my humble opinion, gave the worst speech of his life. Despite a lot of good news coming forth from the conference, Mel made a few statements that would have been better kept to himself.
When asked about financing of the 2009 converts Mel initially was adamant that no dilution would occur. He offered up an exceptional plan that outlined the company’s ability to use cash on hand together with bank loans. Later however, he went a little farther into detail, making the statement that he hopes he does not have to lend the company money out of his own pocket.
Excuse me? Mel just told Wall Street that he believes in Sirius XM so much, that even he does not want to lend the company money! How then can he expect a bank to do the same? A slip of the tongue? An accidental joke gone astray? Absolutely, but the effects were seen in the stock price depreciation today.
The other huge mistake was reporting low-ball estimates so low for 2009, that most analysts will have to lower their forecasts. Mel might as well have said not to bother to buy the stock until 2010, because he was so conservative with the subscriber estimates for the year, that he inadvertently lowered guidance.
Of course Sirius XM will sign more than 2 million subscribers next year, but Wall Street can only go on the data provided by the CEO of the company. Mel in effect stated that the company would see ZERO subscriber growth in 2009. In fact, his estimate for 2009 will be less than the expected total of 2008. All this on the heels of an exceptional presentation outlining increases in OEM penetration rates.
Another mistake? Of course. Any idiot could see that. The problem is there are not that many idiots on Wall Street. When Mark Wienkes and Jim Cramer get a hold of this, there will be hell to pay.
Disclosure: No Position
forgot the link…
http://blogs.barrons.com/techt.....hoobarrons
Plowboy…feeling bad is ok…but to say shit like MEL IS PART OF THE CRAMER/GS “SCHEME”….is just bitter bullshit talk that is about as far fetched as the 9/11 conspiracy nuts.
I mean COME ON. Are you serious? If you are, you shouldn’t be investing, because thats just crazy talk.
Yeah, Mel is “shorting” his own stock. This is Mel’s swan song doofus. If you knew anything about the man’s track record with other companies you wouldn’t talk such shit.
Hey, say you don’t like the man, fine. But to spout such obvious lies only shows your ignorance.
We’re all hurting here. If you’re gonna bash Mel tho…bash him on facts. Not made up shit.
instead of bashing and freaking out why dosent everyone generate more subs – activate service in your car, your families for christmas etc. proof in terms of numbers is all that will move the stock.
Ride the wind. Think long-term. The prospects are getting better. Nothing said today was negative. The outlook is improving. Advertising will improve with the number of subs above 20 million. Refinancing will be easier with the credit rating improved. This time next year, with some minor surprises, will make you wish you held on.
Brandon – stock is going down because people are selling & your included in that group.
How come NO analyst at the conference today asked if there will be ANY commercials aired on tv promoting the October 6th launch date of the BEST OF and new a la carte radios?
Are the analysts retarded? Or just stupid?
Um…don’t answer that.
All I know is that if it were a SHAREHOLDER conference, you’d get GOOD friggin questions!
I mean, WHERE is the TV campaign??? Please don’t tell me Sirius is waiting until the friggin SUPERBOWL????
We need the word out NOW dammit!
Especially since the NFL season just started. Wheres the commercial promoting this? And the new Mad Dog show? And the Best of options?
Wheres the Sirius version of XM’s EVERY TEAM EVERY GAME? commercial?
I can’t for the life of me remember ONE Sirius commercial besides the domino ipod one. Which told me NOTHING about Sirius and what it offers.
This is really inexcusable on Mel’s part.
We need a damn commercial. Now more than ever. A really creative fun one that highlights the NFL, the MERGER and the COOLNESS that is SIRIUSXM.
How friggin hard is that to do?
I bet if you walked up to the average joe on the street they wouldn’t even KNOW that Sirius and XM merged! Let alone that the NFL is on both with the BEST OF option.
But I bet they’d know about EVERY TEAM EVERY GAME and Big Poppie on XM.
THIS my friends is the power of advertising, and for the life of me, I am SHOCKED that 2 months after the merger there has been not ONE FRIGGIN COMMERCIAL CELEBRATING THIS GREAT MERGER OR WHAT THE COMBINED COMPANIES OFFER.
All I know is that Mel BETTER FRIGGIN HAVE A COOL COMMERCIAL for the BEST OF LAUNCH ON OCTOBER 6th!
If sirius is going to receive a bunch of downgrades from the analysts, when is the next time we will hear some good news, 3rd quarter results? My investment is down 70%, fak it, i’m holdin on til the end. Just like George Costanza in the Stock tip episode, “Like the captain, I’m going down with the ship.”
Am sure Mel will advertise Oct 6. A cool commerical would be all the celbs form sirius/XM hanging out – Howard, Oprah, Martha, Nacsar, MLB, NFL – showing that the two companies are now one. I think it is lost on the average consumer how much content they are receiving for $12 a month. The picture/slide of todays webcast with all the celbs on Sirius XM channels was an awesome image to see.
Below $1 soon?… Come to papa!
Friggin…
reason you have seen no commercials…no radios in stores yet.
Investor…people are selling because of Mel’s accidental lowered guidance. I just happened to be one of them.
Chizzle…herein lies another problem. Q3 will not be good. Merger expenses should weigh down the quarter. Also new radios coming out on the 6th mean increased chip subsidies and SAC…
Plowboy…
Your post was deleted. Racist posts are not allowed.
Tyler of this website said this yesterday: “Thus, I feel it important that sector followers listen to the speech, but temper enthusiasm for announcements with the realization that this conference is not a Sirius XM Radio conference, but rather a general media conference.”
Did Tyler have a hint of the overexpectations by his readership and at least one of his partners?
Did we forget about the retail end for 2009. With new sub plans and devices I think the 2 million net 2009 subscribers is wayyyyyyyyyyyy off.
Brandon-
Thanks for your response.
I really think Mel let his emotions get the best of him today. Instead of staying cool and answering questions succinctly, he harped on commercials on terrestrial radio decreasing (which got quoted as if he was saying revenue for Satellite would be down as a result) and made a quip about financing the company himself. I think after having to put up with a year and a half of having to bite his tongue, he finally lashed out. Unfortunately, he did this publicly.
sirius…
absolutely….WAAAAAAYYYYY OFF! But now a problem. Values and earnings are calculated based on that growth. When he lowballed it, he low-balled the stock price also.
He forced every firm on the street to go back and redo their models, and EVERY ONE of them will come out lower.
Even Wienkes had them at 2.1 million subs. The average was 2.5. Mel comes out and offers 2.0.
That’s the crux of the problem now.
Steve…
You’re welcome. Delving further into your earlier question consider the following. Mel said he had received calls from people who wanted to invest in the company.
Think about that and how ridiculous that statement is. The translation of that is someone wants a controlling interest as in buying out the company.
That is why it has not been done.
Last week … on Tuesday … at 2 pm … while scheduling a large tablet PC rollout project I started feeling ill. After emptying my guts out both ends I felt a little better and was able to sleep that night. Next morning, though, I started feeling sick again and by noon was passing bright red blood. BAD sign. A fast trip to the ER and an admission later I had six docs puzzling over what it could be. E.coli? Salmonilla? Four days and LOTS of IV’s and blood draws later I got released. Still have no clue about what caused the problem–but no doubt it was an evil bastard of a bug. Know what I thought about mostly while going through the episode above? Sirius XM … okay actually all I wanted to do was get well. But I thought about SIRI a lot. In an earlier post I said I came in as a trader but decided to invest instead because it will be a year and probably longer until the company will, if it does not melt down entirely, realize free cash flow and other significant fundamentals that will do for the stock price what strong antibiotics just did for me. I use chart patterns as well (thanks Thomas N. Bulkowski) but stopped tracking technicals because–and also as I said in an earlier post–events are driving an innordinate amount of what is happening. EVENTS LIKE THE ONE THIS MORNING THAT DROVE WHAT HAPPENED TO THE STOCK PRICE TODAY. The company makes products that users love. It provides an awsome variety of programming content. It is an SEC and FCC blessed monopoly. Sirius XM has tremendous business-to-business partnerships (admittedly with some that are suffering badly due to economic conditions). Ah! The economy. What is going to happen when the economy recovers? The bottom has already been called in various affected sectors and industries. So, I picked up 600 more shares and averaged down again, to 1.50 and two insignificant additional decimal points. Stupid me? Or contrarian me? Let Cramer flame Mel. So what? And what about Mel’s mea-culpa today? He is on plan. So stop the whining and hand wringing. Either get out or don’t. If you don’t, though, plan to go way long. My strategy is simple. Keep picking up shares as the price continues to slide. The share price is down, down, down, but the company is not sinking–struggling as any merged entity does to shake out–but dot going down. And while I’m at it, what about the products and services to come? They are coming after all, and I can’t wait for them and what they will do for this troubled stock.
I will be calling Blalock tomorrow asking how Mel came up with that 2 million 2009 sub total.
Brandon-
Do you think that Mel’s mention of investing interest was to indicate a possible buyer, or just to indicate that the company, if the credit markets were bad, would have options? Also, what do you mean when you say “That is why it has not been done?”
Also, the fact that Mel announced curtly something to the effect of “the call is over” adds to my gut reaction, that he was just pissed off at the questions and kind of lost his composure. Any thoughts on this?