Sirius Weekly Thread Week 9-08.09

[Big Ben]

Jswede is talking some sense...yea - I've done the research.

$7.5bil in assets includes $2bil in licenses, $650mil in "intangibles" and $1.8bil in "goodwill". That's $4.5bil of made-up value just to keep the balance sheet 'balanced'.

The $3.2bil in satellites are specialized so they would be worth very little as well -- even DTV can't use them.

Stockholders' equity is at $143mil.... take away just the 'goodwill' and you're in a hole you'll never get out of -- now add in the other worthless assets and tell me where you're at.

Point is they are not making money and the interest is far outpacing the cashflow -- and in the eventual restructuring the common is worth $0.00... the debt may be worth 50-75 cents on the dollar.

[sxminvestor]

Big Ben wants to buy in heavy in the worst way and is hoping for the .50's again.

3rd & 4th Q sub increase and continued improvement in cash flow with growing revenues and continued cost cutting/expense drop.

Iphone/Ipod Sat converter - GAME CHANGER - for the 4th Q and beyond.

See you all at 1.00 in 6 weeks.

[JohnnyIrishXM]

Well big ben,this bull has you answers,even tho i hate responding to idiots who have no clue what they are talking about..
First off Interest payments are 320 mil a year on 3.26 bil in debt at avg rate of 10% for all debt..

Second with 2.4 billion this year in rev(09) 320 mil in interest is roughly 14% of rev,look at it as our mortgage paynent,you do have a mortgage and know the ratio it should be to income right?(avrage is 28% of gross inc)..

Third is goodwill and intangibles and sats are not wothless made up on paper nonsense,this is where you make yourself appear clueless about bussiness,the goodwill and intangibles are tax writeoffs on future profit at corp rate of 35%,and sats are very important to anyone who wants to buy the company(directTV and dish can use them,here again clue less).

Fourth is Rev or rev from existing customers and future customers has been raised 22% since merger,all with SXM's hands tied on raising sub prices for 3 years after said merger,excellent management right?
and they got to pass off royalty payments to customers with equal % going into general fund..

Fifth point is learn EBITDA and know what it means to media companies and how they are evaluated by street analyst.

6th point is no one wins in a delisting(bond holders,Liberty,managerment with their ridiculous salaries(stock options anyone) and retail common holders)so it won't happen,stock will be allowed to rise as 3Q and 4Q show tremendous FCF metrics and actual PROFIT,all based on no growth with todays 2Q number of subs,so if you think we don't grow at all from here we can still pay off exising debt,,gee i don't think even you don't see sub growtyh going forward..
Well that is just a few points,now go look up definitions of some of these metrics and get back to me,ARPU,SAC,CHURN,FCF EBITDA,NOL...

[john]

JohnnyIrishXM, while I agree with most, I think while you will most likely see sub growth in the 3rd quarter you will also see a major hit to FCF. Thats ok though because in the 4th quarter, they may only get few subs they will also have a huge and I think it will be a huge FCF number. Next I dont think you explained EBITDA well enough and where this company stands so far. So as most know it is profit not including intrest and basically stock options, sense that it most of the remaining cost left unaccounted for. As you say and I will use your number of 320 million in interest we take what SIRIXM is at so far and that number is about 240 million in EBITDA. Now while I believe they will take a hit to EBITDA in the 3rd quarter the 4th quarter will also make up for any short coming in the 3rd quarter. So basically looking at it from a common sense view point SIRIXM has 2 quarters to make half of what they have made in the last 2 quarters to be profitable with interest included. Now there is the stock that was given and it is a expense but one that effects the PPS (dilution) more then cash on hand. So the question that is left is who here thinks that SIRIXM wont make half of what they made in the first 2 quarters when the first 2 quarters are usually the worst of the 4 when added up by twos and averaged out. What that means is historically for this company 3rd is worse the 2nd and the 4th is better then all of them. So when you add the 1st and 2nd quarters up and average them both and then do the same for the 3rd and 4th, The last 2 quarters combined tend to be way better then the first 2 quarters.


P.S. I think it wise to remeber though when I say historically that means watch out if there are extra charges that are not normally there in the 3rd or 4th quarter. That happen with merger cost in the last 4th quarter which is what caused them to take a hit to their FCF number. Satellite cost hit XMSR in the 4th quarter of 2007 and caused them to have a poor FCF number, while at the same time SIRI was FCF positive for the last half of the year.

[underway]

Good points John and Johnny......
I do wonder if the sats are usable by DTV though. Not sure about that. Anyone have a solid fact on that one? It's an important issue. If they are, that opens up a lot of very positive possibilities.
Anyone with a lot of dry powder today should be able to snap up some shares as this delisting BS is going to pressure the SP most likely.

[john]

Good points John and Johnny......
I do wonder if the sats are usable by DTV though. Not sure about that. Anyone have a solid fact on that one? It's an important issue. If they are, that opens up a lot of very positive possibilities.
Anyone with a lot of dry powder today should be able to snap up some shares as this delisting BS is going to pressure the SP most likely.

No they are not. That still does not mean they are useless or have no value. each one cost 850 million to put into orbit. If you are going to be or buy satellite radio then you will need them. I also think while the cost of satellites are expensive it will be made up for in the fact that they dont have to pay the high cost (business killer) of internet to deliver content.

As an example:

Now I may have this wrong but I think when it was shown in an article about Pandra finally getting a royalty deal that seemed to make them viable that deal requireds them to pay 25 % of their revenue. Now if that 25% is correct that would mean that SIRIXM would have to pay 600 million in royalty cost each year just from the revenue they get now (and that is not including any extra cost if their revenue gos up from here), if they totally went the internet route.

[underway]

No they are not. That still does not mean they are useless or have no value. each one cost 850 million to put into orbit. If you are going to be or buy satellite radio then you will need them. .

Except under the possible scenario that sat radio becomes an unattractive investment, in other words, the biz model falls flat in the face of competition from other mediums (internet, etc). While I don't believe that will happen, it does affect the value one places on the satellites if in fact they are ONLY usable for radio. If S-XM were to fail, no one is buying those satellites to start up another sat radio biz. On the other hand, should they have value to DTV or Echostar, that's another story.

[candleman]

We're only 30 minutes into the trading day. But, we're not looking too bad. Holding around the .67 mark on good volume. That says to me that the selllers aren't running for the door and dumping the stock. This is good!

[doctorex]

in a re-sale situation it wouldn't matter to siri stockholders whether the sats are usable by other entities or not. if sirius fails then the common stock is cancelled, and the holders get zero sats resold or sats not resold. maybe a siri bondholder would care about this, but in a business failure the common holders are wiped out to zero. this is not going to happen, of course, in the considered opinion of doctorex, and once the market figures out that siri's business model is now described in one word, that is, the "m" word, then we go to the house of pleasure. here it is in plus-one code:

N-P-O-P-Q-P-M-Z.

[underway]

We're only 30 minutes into the trading day. But, we're not looking too bad. Holding around the .67 mark on good volume. That says to me that the selllers aren't running for the door and dumping the stock. This is good!

agreed. the delist notice was expected, so we're seeing only a mild retreat. Good time to buy, cause it's going up over .70 towards .80 very soon.