Take A Look At The 12b-25 Ext: What Does It Reveal?

[SteveSirius]

Volume of trading for SIRI today is relatively low - all despite GM tanking over 17% today alone and the DOW plummeting again. Yes, SIRI stock is down 8/10 of a cent, but what is so unusual about that?

It seems to me, whatever the reality, that the big boys are not worried at this time about Sirius XM bankruptcy or language which would send this stock into a tailspin.

I am not saying that I know anything about what will happen, but don't you think Malone knows what the situation was as of 12/31/08? Does anyone think that he would risk $250,000,000 (so far) in February if he was worried about getting that money back in March - just one month later????

I wonder how much of the language in Sirius XM's recent filings was simply required (pro forma) language required by the SEC since Sirius XM is a publicly-held company. I wonder also if such language is required at the time filings are required to be made, despite extensions made at that time.

So, at 12:30 pm New York City time, SIRI has traded approximately 8.5 million shares. That is not a lot. That is not a number that would indicate big holders are worried at all. That also is not a number which would indicate that the average small investor is overly worried. The market sucks. GM (in whose cars satellite radios are installed) is in disarray. So, SIRI is down - what would you expect today?

I hope the naysayers on this board this week are wrong. I know these naysayers are very intelligent people, and I respect their thinking and wisdom, but I hope they are wrong.

[bababoooie]

Well..IF YOU'RE LOOKING FOR GOOD NEWS!!!!
The recent Short Squeeze report indicated that the shorts are leaving the building:
Short Interest (Shares Short)158,732,700Days To Cover (Short Interest Ratio)1.2Short Percent of Float4.59 %Short Interest - Prior271,931,400Short % Increase / Decrease-41.63 %Short Squeeze Ranking™-5
It's gotta be real difficult to cover your shorts without impacting the share price. Could you imaging what would happen to those groups that received shorts to cover if the price were to go up on stable or upbeat news.
The previous days to cover was 11. That 11 days was based on the 3 month avg vol of around 24M. The recent BK scare pumped up the vol just a bit, and now places it at 135M. I can't figure out the time period used by Short Squeeze, but any data prior to the Actual Merger should be discounted. My numbers come closer to 55M (discounting the 15 most excessive at each end). Including the excess days I only come up with a 65M average vol.

Owing to the information given above, shorts have two options:

1) Remaing shorts are hedging their bets on a RS and have a buy order ready to ensure profit on the short. Hoping the shares will drop again in price.

2) Remaing shorts are making a orderly exodus in an attempt to maintain current profit levels by buying in low volumns to cover. This low volumn decreases the likelyhood of a run on the stock.




SO...If Mels released good news, would it hurt the shorts?

"You Bet'cha"
- Sara Palin

[john]

FoolNHisMoney... my figures were based on Sirius XM maintaining 20MM subs for the year... not a decreasing figure. If churn is 1.7% each month, then that will be 340K cancellations each month -- or just over 4MM for the year - which would need to be replaced. My 50% OEM penetration rate is a conservative estimate, yes. Even so, that adds in 2.28MM in new OEM subs for 2009. This leaves Sirius XM needing to bring in about 1.72MM in GROSS new RETAIL subs during 2009... or approximately 430K each quarter.

Looking back at 2008 for a moment, XM had GROSS added over 450K retail subs in the first half of the year. Sirius' retail gross should be about the same amount... so that takes the figure up over 900K in the first half. Then, keeping in mind that Q4 is typically 40% or more of the annual gross retail subs for DARS... I'll continue to be conservative because of the economy and estimate that Q4 was only 30% of the annual sales. That still puts my estimate of gross retail subs for both companies at about 2MM for the 2008.

For Sirius XM to not lose subsribers for the year -- they need to gross add an additional 1.72MM at retail, approximately. With Sirius XM doing over 2MM in 2008, can they do at least 1.72MM in 2009? That is the question.

I think they can...

Furthermore, as you noted above - the OEM figure is making 2 big assumptions... First, it assums no improvement in sales going forward in 2009; and also assumes just a 50% penatration rate on a very low annual sales figure.

Jump back to 2007... total US auto sales topped 16MM and XM was installed in about 3.5MM of them. The ramp had XM going into 4MM in 2008 and 5MM in 2009, with Sirius right behind them. With the 2009 projection of 5MM XM and perhaps 4+MM Sirius and annual sales projection of 16MM auto -- that puts the penetration at about 56%. You put that penetration rate on 9.1MM vehicles sold in 2009 -- and then a 50% take rate -- that increases the OEM additions for 2009 up to 2.5MM. Making the need at retail even smaller.

So yes, I still very much disagree with Brandon's numbers and claims.



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Exactly my point that while I have corrected the churn rate several times to show the reality of it. People get confused that while the NET OEMs are not enough by itself to make up the difference in Churn, they forget it is not the net amount of RETAIL subs (because then you are figuring in churn twice over), it is the GROSS RETAIL subs that you have to use to get the final number.

[john]

bababoooie, that already was a article topic here at Sirius Buzz. Go to the main page and scroll down.

[asm610]

Hey All,

Been pretty busy today, Market still upside down.....ba humbug. I am still baffled by the Seniority of Debt, and the who owns who of SIRIUS/XM. Researching to unravel that whole mess isn't so fluid as I would like. But I am still long and bullish on the stock at this point.....queasily so.....but long and bullish never the less!

[TWAsiri]

Sl, Regarding potential for increased activation rate...Pure speculation mind you...

My guess is that the financial resources of the average new automobile purchaser are better than that of the average customer a year ago. Those with less resources and/or uncertain financial stability (fear of job loss) are either not buying or are now buying less expensive used vehicles. If true, I would think that such a customer base, on average, would think less of the cost for a subscription and are subject to activate. A stretch.....maybe.

[sl62]

SteveSirius...

I agree with you on the language in the 12b. I posted kind of a (well-intended LOL) rant last night about a current increase in negativity on the board. But in it, I opined that much of the negative language in that filing is not disimilar to that which lies in any of their recent prospecti. IMHO, they are bound to be as negative as possible so as to cover their butts against possible sharehlolder suits. By being so negative, a judge would never understand why an investor bought shares under such a negative outlook and therefore the burden is clearly on the investor (which it mostly is anyway as we know). After today's GM release I also now believe there is a good chance KPMG will indeed issue a concern clause (if all is equal and they are bound only to look at the state of the company as of 12/31/08). And this, my opinion, based not on the negative language in the filing but because that potential technicality. From there I see certain ways around the claause (such as a waiver from Liberty) to still be able to consumate this deal. Over-arching though, as this info is released and digested, a real possibility exists for the SP to take another brief hit as MSM pounces and spins. But given all that is known of this situation, I still just can't see BK becoming reality right here. Too messy, too sloppy, too potentially damaging to brand, image, and a host of other things. IMHO..

[edeyoung99]

I believe that the media is just waiting to announce on the 16th the "growing concern". It will cloud over the good news. And there will be. I have to tell everyone here that I have a "growing concern" in my pants. do you want to know why? It is because the DEAL IS DONE!!!!!!

Brandon- I believe you are a fair and honest man, but you are instilling fear into the heart of these fine people. You truly believe that Mel jumped through fire (Bk), fought a bear (Ergen), lied to his children (shareholders),raped in the shower (media) and beat his own ass(siriusxm) to just end up quitting in the end? Seriously, you believe that? It will be ok Brandon. Mel loves this company. He just believes in tough love.

[SteveSirius]

Hi sl62!

I have no actual knowledge of the financial situation of Sirius XM, but I have seen loads of documents issued by publicly-held companies that contain scary sounding langauge mandated by the SEC - language such as "financing, if available, may not be on terms favorable or in amounts adequate to consummate this transaction." (or similar wording).

I am not saying that Sirius XM does not have financial problems, but disclaimer language like this is in an awful lot of offering and filing documents of companies that are on sound financial footing and that are considered "bankruptcy remote." Of course, it seems that Sirius XM is not "bankruptcy remote", and that probably requires them, by SEC rules, to issue certain generic warnings.

Hope our lack of pessimism is well founded!

[john]

sl62, I told you it was not all peaches and cream for SIRI before the merger at SA. I even brought up the CAPEX for the satellites and that alone would put SIRI in the same boat as XMSR. I still dont think SIRI needed to put those satellites up. That theirs were not in as bad shape as XMSRs were.

Homer (and FrontMed), as you recall I also said SIRI was in a better shape then XMSR. As you recall my point of view came from the fact that SIRI satellites still had another 8 years left (when the arguement took place) where XMSR had to replace theirs at a much faster pace then SIRI did. Now seeing SIRI for what ever reason wanting to put newer satellites up a full 5 years before they need to (once again) FOR WHATEVER REASON, that changes my opinion.