Will Sirius XM Get to the Teens?
A stock price that was beyond comprehension only three months ago is now edging ever closer to actually happening. As of this writing, Sirius XM Radio is in danger of dipping into the teens. This will place the equity at a new all time low, as well as bring it further away from the $1 Billion market cap that would allow the company to access a $100 million credit facility through Loral.
The company has expressed that they are active in trying to negotiate financing for the $200 million due in February of 2009, but as yet there has been no indication that acceptable terms have been reached. The debt issue and frozen credit markets have taken their toll on many companies, and Sirius XM have not been immune.
While company guidance remains that profits are around the corner, the street perception makes any such projections difficult to believe. Negative headline after headline mire the entire investment community, and at this point a recession seems to be a self fulfilling prophecy. The economy is confused, and retailers are so worried that they are initiating Black Friday sales a week and a half early in hopes of prying money from consumers who seem more apt to hold onto their dollars.
With this being only Tuesday, we could be in for a rough week, and at this point, unless there is positive news to reverse the trend, a visit to the teens seems more and more likely. At that point, people will begin to wonder whether you can get a share for one dime!
Position: Long SIRI.
Who would of thought that it would come to this.
I don’t know how far back you guys go, but I can remember when profitability was tied to 1 or 2 million subscribers.
Remember those days?
yep
Just find it hard to believe a share of this company isnt worth more than 20 cents. Nearly 19 million subs and a 3rd quarter report that wasnt to bad. Numbers were reaffirmed and the company provided clear guidance.
At this point there is very little that can save us other than time and debt refinance which better happen pretty darn quick or we are in sirius TROUBLE.
This is more depressing than the economy in general.
$.20 per share. How does this happen?
Mel Karmazin might learn from Yahoo’s Ying. If that’s the only way to get a Pop on the PPS, then its his duty to resign.
Well Gentlemen… (and ladies, if there be any on these boards)
It appears as though our ship has suffered a small collision with an iceberg of debt.
Whilst our captain and shipbuilder have thought this vessel to be unsinkable, we appear to be taking on water to a catastrophic extent. I therefore recommend all women and children(GS and the like) prepare to board life safety vessels and clear the sinking ship.
1st class male passengers are relegated to any available life rafts.
Regrettably, 3rd class passengers (most of the rest of us) will be locked on the ships lower decks to prevent their exodus from the ship.
In other words…
So long, and thanks for all the fish.
I’m sure the grim news about GM, and the government’s response/non-response to it, is playing heavily into the current sentiment regarding Sirius XM as a stock. I think this is expecially so occurring at the same time Sirius needs to obtain financing – such financing likely precluded on the outlook of profitability as viewed by potential lenders. All I can say is “ouch!”
.20? You mean to tell me that XM and Sirius alone are worth more than Sirius XM? Nonesense!
What we are seeing here is UNPRECEDENTED MANIPULATION!!!
The questions are:
1.Who is doing this?
2.What do they gain from dropping the price like this?
3.When will it stop?
4.WILL IT EVER STOP?****THE MOST IMPORTANT***
Tyler, u have insisted that bk is not associated w pps. At these levels I find it hard to believe! Any comments?
kevin….
bk is not a function of stock price, it is a function of the financial stability of a company. The big overhang on SIRI is the debt.
The immediate debt of $200 million due in February will be handled, it is just a matter of when and how. The company has $359,000,000 in cash, and Q4 will be a profit quarter. They could pay down the Feb debt in cash if the had to, but that would leave the cash position questionable. This leaves the rest of the year to deal with the other $750 million of debt.
IMO BK only becomes a threat if the financing due later in 2009 becomes an issue.
sorry guys its my fault, i bought more shares on friday
Well……………………..
Everyday I read from posters and Writers the defense of Sirius management.
Tyler, seems to be the only one capable of reporting the current situation and leaving it to the reader to make their own conclusions.
There is a huge disconnect between product users and product investors!!!!!!!!!!!!!!
Investors feel that someone should actually be looking out for their investment.
While users of the product, are happy to post. Reverse split and dilution are fine by me.
As long as I still get MY favorite channels………….
You know what dilution is to pay down the debt their product users??????
It’s stealing.
It’s telling investors that please buy my shares for “x”, so I can pay down the debt and stay afloat.
But after they make the sale, your left for dead. It’s stealing because they want you to buy the stock from them with “YOUR” hard earned money.
But they have no intention of paying you back or returning you a profit for your loan.
UN FRIGGEN BELIEVABLE
Tyler,
I agree with your bankruptcy post.
But my Spiderman sense is telling me that the stock market never lies.
At least that’s what I’ve always been told.
For example. When the XM/Siri 4.6/1 ration went out of whack, just before the merger, many said. Oh investors are stupid.
Turns out those in the know, knew that Sirius management was having difficulty with financing, and well we all know the rest from their.
So to be open minded. I agree with your BK assessment.
But…………..Tyler. Those in the know, will know before the average Joe, that the company will be forced to RS and dilute in the near future……………
That to me is the story unfolding with this stock. RS and dilution.
A picture of a dime . . . how appropo!
“Brother can ya spare a dime?” (circa 1931)
If it wasn’t 31 degrees outside socal I’d go hit the boards for a good 10 mile head-clearer.
Tyler . . . thanks for keeping it real!
Tyler,
All you need to worry about is the Feb. debt 210M,the credit facility of $350M will, hopefully, be extended (pray for the loan to the autos). As far as the Dec. debt (~$450M) is concerned, SIRI can default on it which in turn would bankrupt its subsidiary (XM) without affecting the parent, Sirius.
It’s hard to believe but Mel has always made money for his shareholders (i.e., Infinity and CBS) by selling them to bigger sharks. So far, SIRI is the only exception but I believe Mel will do the same for SIRI shareholders sooner rather than later.
Hey Roadkill.
Looks like a gym day here.
Gotta work the whole damn thing.
Peace
Also agree Tyler/socal on BK . . . worse case scenario, Goldman Sachs (god forbid) gets the new converts they want . . . along with a reverse split, more shares and shorting nirvana.
can’t imagine a bankruptcy judge accepting a voluntary petition where the most immediate secured creditor is offering new terms . ..
I think if i had the 359 million on hand in cash id gamble and pay the 210 million off for feb and hope that the stock popped up about the .31 cent range. If it did then i would take the 100 million from loral and place it back in the bank to draw interest and use it to help pay the may debts. Im not sure how much is due in may but the may debt concerns me far more than the feb debt because i believe it to be a larger chunk.
I remember when a guy on yahoo just a few short months ago, posted this. ” Sold a share of Sirius today to buy a slice of Pizza”.
At that time we were over $2,and I thought thats funny. ha ha.
Now for .20, I can get four pieces of licorice at the snack bar. Wow!
SyNiSteR. Not a bad move.
Tyler, are you averaging down at these bargin prices ?
Inst. ownership was at 37% yesterday down from 52% a week or so ago, why ? How could the R/S vote pass, when most retail will vote “no” ?
Within the past week or so Homer985 made an interesting post showing a book value/liquidation value in bankruptcy of about $0.40/Share.
Homer, if your out there could you please repost that here, with any adjustments if needed . . . can’t remember where it was posted originally. Thanks!
Pardon my ignorance but…
Why does SIRI have to have no debt?
Every company on the planet carries debt don’t they?
Isn’t is about being to handle the debt with enough cash flow to service operating expenses and pay down debt over time?
SIRI has 600+million coming in don’t they?
imromo24
It is not your fault, it is mine, every time I buy it comes down, every time I sell it goes way up.
6 months ago I would sell at 2.9, then it goes 3.25.
Then I buy 2.70, it goes 1.80
I buy 1.60, it goes 0.75
I buy 0.60 to average down, goes 0.50
Yesterday I buy 0.25, now to 0.20
I guess no point of selling now because I am sure it will go up
Most stocks are 60-75% down YTD
most Banks, insurance, energy funds are about 80% down. Fedility select energy fund $ 40 from over $119 a year ago. Who knew !
Avis-budget is trading 0.60 from $ 18 a year ago.
I hate it when all those posters here say, well you should have done your home work before investing in Sirius !!! Well, if they are that smart they should work for Lehman brothers or GS and saved their collapse
I can buy 5X as many shares today from the last time I sold and I can’t pull the trigger because it just keeps going down.
Maybe at .15 cents, but I’m just concerned it will just go off the market at this point.
How do you get loans for 910M for debt when your market cap is headed for 1/2 that ?
The loral 100M looks like another thing gone wrong with market cap well under 1 billion.
I’m sick – lost tons of $ in the last 6 months on this & my family lost a crapload more as well, which makes me even sicker.
How about the (SEC)Sleeping Exchange Commission that are ignoring the spiral down towards a dime.
whats the odds that….when the stock hits 10 cents, SIRIUS can buy back all outstanding shares. That is when the real short squeeze will begin in earnest.
Does it make any sense why the recent purchases last week of hundreds of millions of shares bought by institutions. Do they know something we don’t?
Good comments about every company having debt. Also nice to feel better about the Feb debt. I only worry about BK. If we can get past this recession and into the recovery we will be fine. Now everyone go out an give the new XM portable as a Christmas gift. The 4th quarter results will be critical for survival. A plus there would be really impressive. If the Feburary debt gets taken care of I think a lot of good things will happen. Question for anyone: can you request that your SIRI stock not be loaned for shorting? Seems like I read that once.
I did everything I could for you guys. I sold 11870 shares at 20 cents. Lost $17,500. I am now convinced the refi terms will be horrific and/or the dilution will be huge. I think the only way this thing gets any kind of pop is if a Mr. Softee, Apple, Google etc decides they want to be in Sat radio….The democrats bled us to death….GOOD LUCK
Good thread. Excellent article to get the juices going, and great replies. I am so tempted to pull the trigger but will not, again for lucky number seven buy, until there is more certainty one way or another.
Mr. Karmazin,
The time has come for you to stop pussy footing around and address your subscribers. This recluse/deaf mute routine has gone on long enough; have you looked at the stock price lately? You are allegedly beholden to the people who buy the radios and pay for the service. You get paid a lot of money, and it is time for you to man up and do something. Anything, for Gods sake !!!
This isn’t just about radio anymore – this is about peoples lives. People are depending on you. Just a positive word from you would go a long way towards restoring at least a glimmer of hope.
If you have a conscience, you will act immediately and start putting up a fight like this companies life depends on it… because, quite frankly it does! Show us some passion, MEL. Get off the canvas and start punching. To just lie there and wait for the 10 count is unacceptable. You’ve got the support of millions of people behind you, the majority of whom DO NOT want satellite radio to sink like the Titanic.
When things get really bad, it calls for extreme measures. Anything less than your absolute best effort to save this company will forever taint your reputation and your legacy. Personally, I wouldn’t want to live with that hanging over me for the rest of my life. After all that you have accomplished, I have to believe that you wouldn’t either!
GS….
I am not averaging down. I have maintained a position in this equity for yaers. i sold a lot in 2004, and the remaining position has been pretty consistant since.
Does anyone know if any of the management and/or Board members are forgoing their bonuses?
Has there been any mention of the Board or management cutting back on their salaries?
Just wondering because we are paying them way too much for their p..s poor performance on our behalf.
Guys,
There are questions here about why sirius cant have debt. The simple answer is they can. They can have debt just as much as any other company but just like any other company when debt comes due you do one or two things.
One, You pay it. Two, You refinance it.
Lets be clear, Sirius is trying to refinance the debt they have but as we all know the credit market is pure garbage at this point. Thats what makes this issue more complex than it ever had to be. If we was in a credit market of even a year ago this wouldnt be a big deal. What does that leave if they cant refinance? It leaves the only other option and that is payment of debt. They have around 360 million in cash but that hardly touches the amount of debt they have to pay. Therefore you have concern from investors as to if the company can “survive” or not.
Two things we have going for us as investors is one, Nasdaq has allowed some breathing room for delisting. That will help us for a while. There is no concern for delisting near term.
The other thing is time. We know that they can cover the feb debt in one manner or another. The real questions are the may 09 and dec 09 debt. Can they cover those. We will just have to wait and see. My guess is they should be able to with any luck. Once this is covered the grass starts to get alot greener.
Sny..
So if the investors don’t think Sirius is a good investment now why would they think it was a better investment after the company has to dilute and do a RS in order to pay it’s debt and get its share price up to what appears to be a respectable amount. I would think WallStreet would still laugh at Sirius after that.
Or am I missing how Wallstreet works and that is that after the debt is paid for by killing the current shareholders who cares, the company is then attractive?
Thanks,
The spectrum has value. The current pps is to low imho.
It is to bad that the XM-Raytheon bid on the FAA contract was not accepted.If they could just find another customer for part of the spectrum that could bring in cash. What about Clear Channel?
That reminds me of the post I read where someone said jokingly, that Mel was an agent for the NAB sent to destroy Sat radio. That was a funny post.Makes you wonder for a second at the current share price though….could it be..? Naw..
The next two months as SoCalRun has pointed out will tell the story and I agree with that statement.
RS?,dilution?,loans approved?,loans not approved?,buy out?,forced buy out?, taken private?, BK?, partnership?, bail out? why not us too? and at least we know how much money we really need and what to do with it.
imho
vaporgold
Vapor.
I agree. PPS has to be to low.
That being said. Those in the know…….know.
Right now the trend is volume increases as prices decrease. That is a very very bad thing in your long.
Sirius seems to follow that pattern. We go lower the volume picks up like today.
Go figure.
We are on the Feb debt countdown. Markets appear to be saying, Mel’s statement that it will be in short order.
Is R/S + Dilution + Shareholder _________
I’m sure everyone can fill in the blank with their own word.
I meant R/S + Dilution = Shareholder _______.
r/s + dilution=shareholder takes it in the ASS w/o ky jelly…ouch you bastard MEL. But your turn is coming so bend over too.
Hey, btw Tyler . . . that 2002-S Ultra Cameo Proof Dime depicted in the photo above would buy about 150 shares of Sirius XM stock based on today’s close price of $0.20. Yup, that dime is worth about 30 bucks . . . or you could hold that dime til share price hits $0.15 and nail yourself down 200 shares.
On second thought . . . maybe ya better just hold on to that dime.
Hope and Roadkill.
High LOL’s!!!
I’m a little rusty on the algebra socal (all that canceling-out stuff is so confusing). . . but here goes, based on today’s close price of $0.20:
R/S + Dilution = SV/50 X $10.00 X (DC)0.5625 X (1-SIC)
where: SV = Shareholder Value, DC = the Dilution Constant (4.5bn/8bn) and SIC = the Short Interest Constant
ok, how’d I do? did I pass?
Roadkill.
Your killing me here.
OK. Let me see. Your saying that the 50:1 must be then multiplied by the
RS = 50:1 x ID x FSIC = CP=.20. AE. CSNV = .12 – Projected FSIC = .01.
RS= Reverse Split, ID= Implied Dilution, FSIC= Future Short Interest Constant, CP= Current Price, AE = After equation, CSNV= Current share New Value
So we all now realize that Mel is going to do the RS which then does the same to the newly issued shares.
And then he plans to sell ASAP after the RS the new diluted shares to maintain his salaries. The salaries of management.
And of course any bonus due them.
No you say. Hmmmmmmmmmmm. Seen any announcement to the contrary.
Oh my. It’s not Mel’s fault. It’s mine cause I trusted him. Beautiful.
sorry socal . . . I’m killin myself after reading that Blodget article S-Hope just posted . . . hey S-hope, where’d ya find that?
but back to the math … assume that after the r/s and dilution the short interest has a downward 20% influence on share price . . . then plug-in your numbers … lets say someone owns 10,000 shares today at $0.20:
10,000/50 X (0.20 X 50) X .5625 X (1-0.20) = $900
bada-bing-bada-boom
Roadkill.
It’s a very likely scenario.
You know what kills me. We are trading at .20, and people are worried about content.
Then there are those that keep saying that we negative posters are harming the company?
WTF. Over.
Roadkill. Honestly let me ask you something I ask myself everyday.
Would you have ever bought any share of any stock in the .20 range, ever ever ever in your entire life???????????????
Even knew the names of them???????????
Socalrunningfool Says:
So we all now realize that Mel is going to do the RS which then does the same to the newly issued shares.
And then he plans to sell ASAP after the RS the new diluted shares to maintain his salaries. The salaries of management.
And of course any bonus due them.
plus socal . . . don’t forget the stock options
boy-oh-boy. what a disaster.
Lets hope the “banks” that are in due diligence are the ones requiring “authorization for the r/s” in-hand before signing a loan commitment for a senior secured note for say, 50% of the $210mm with the other $105mm from cash on hand.
Hypothetically, what would happen if the R/S vote were defeated but the 4mm new shares vote was approved and the stock price naturally went above $1.00 after taking-out the feb converts?
socal . . . wouldn’t even know the name of a $0.20 stock. that’s where the Cramer “do your homework” routine is such a joke . . .
the game is totally rigged. period. ya just have to hope you are on the right side of the bet; it looks as though we are not. the retail investor has no shot
the experience really does make you wonder about the safety of your 401k
To be honest they would have to be ecstatic to have the share price over $1 and still holding the 4mil new shares.
If they go BK, do the talk show people etc., get their regular paycheck.
Do they still show up for work.
And people are worried about content.
It’s true. With our market cap, no way anyone loans us money.
And hey Roadkill. You really do have to believe that the RS and dilution get passed and Mel does the RS and then floats the shares and your bing bada boom bada bing.
On a serious note. Honestly it’s guys like Tyler and Charles that in my opinion, have stood up for this product for years, that deserve better.
And Tyler as a shareholder deserves better. As do all long term shareholders.
Pathetic is what it is. Mel could easily do more. But hey it’s the best management around.