RBC Report Sees Good Q4, But Debt Lingers
After a long dry-spell of analyst reports on Sirius XM radio, RBC Capital’s David Bank has come out with an opinion on Q4. The firm sees a good Q4 given low expectations, but also notes the issues such as debt, car sales, and a potential reverse split weighing on the stock.
The report sees a good Q4 considering made In late November 2008, where Sirius XM CEO CEO Mel Karmazin stated that 4Q revenues should grow at a double-digit rate. The firm notes that this would put the company’s performance above guidance of $2.7bn. RBC notes a late December FY2008 adjusted-EBITDA guidance by the company which called for a narrower loss of $200mm. These factors lead RBC to believe that the company will meet or beat guidance.
However, RBC also notes the uncertainty concerning the refinancing of debt due this year as well as soft consumer landscape at both retail and the auto channels. In Bank’s opinion these factors will continue to weigh on the stock in 2009. All told, RBC is on the sidelines, and maintaining a Sector Perform rating.
On the potential reverse stock split, RBC sees that such an event is likely to happen. They note managements position that the only reason for reverse stock split would be to comply with NASDAQ
listing requirements of minimum $1 share price. By RBC’s estimation, the Board of Directors will be left with few other options but to enact a reverse stock split even if Sirius is able to successfully refinance all its 2009 debt maturities within the next few months.
All in all, the RBC report offered no real surprises either to the up-side or downside. Challenges still exist, and the most notable aspect of the report is their position on the reverse split.
Position: Long Sirius XM
The prognosis by RBC seems fair. Lets hope that nasdaq extends the period so if we are not at 1.00 there won’t be a split.
Analysts across the board have been way behind the curve for so long. And fundamentals have gone out the window. No one really knows what will happen if the refinancing gets done. If things continue the way they are, the Nasdaq will have to extend its deadline again.
I wonder, if this continues, will the board put up another vote to do a R/S this coming December? Or not?
Let me get this straight….they actually said things look good…but even if they take care of ALL their debt Sirius will have to enact a reverse stock split??? HUH?
Once again even when potentially GREAT things happen to Sirius….they can’t catch a break.
I just find it hard to believe that if Sirius has a killer Q4 AND they announce the refinancing of ALL their debt….that they can’t make it to a buck by next November.
Wheres the love? I mean seriously. If there is THAT much hate for Sirius on Wall Street…whats going to stop them from shorthing the CRAP out of Sirus AFTER such a RS??
Just exasperated. Lets just hope that RBC is wrong about the RS but right about the refinancing of ALL debt and the killer Q4. I just find it hard to believe that if they announce such great news that they wouldn’t be able to get it over a buck by the end of the year without a RS. I guess we’ll find out soon enough.
You know what I love about RBC Capital…? They don’t have access to any more information than me! Cheers! I’m sleeping well tonight.
Friggin- think about this. We now have about 3.5 billion shares outstanding, if SXM pays off the debt by issuing another 4 billion shares at .13 and the remainder from cash on hand, and maybe it can refinance some debt with new debt, what do you have left?
A company with 7.5 to 8 billion shares outstanding, and not so much debt… But for the shares to get to $1, the company would have to be valued at 7.5 to 8 billion dollars… seems way too high, even if all the stars align and the company starts doing well. I will take years before the company will be worth this much again.
The best case is if the company can refinance all or most of the debt without issuing more stock at these depressed levels. Then a reverse split is less likely and if we only have 3.5 billion shares out there, then maybe we could get to a dollar, since this would only value the company at 3.5 billion dollars
Mario, I agree with you to a point. The fact is though the size of the spectrum and its potential, are worth 3 billion alone. Here is a good example. Apple went from under 10 billion to over 220 billion in about 2 and a half years. Now I dont care how many Ipods and such they sold during that time, I know it was nowhere near 210 billion worth.
I was referring to market cap.
On another note, has anyone seen that the 2/15 bonds value has been slowly creeping up? It’s gone from 84.50 on 1/16 to 90.00 as of today. It appears to me that those “in the” know feel that the debt issue will be taken care of. What do you think?
CCC SP
Caa2 MDY
N/R FTH
SIRIUS SATELLITE RADIO INC
82966UAC7
Industrial/Broadcasting
2.500
02/15/2009
Graph Trade Data
1 2 3 4 5 6 7
02/04/2009
11:18:47 90.000 660.575 500K @ run calculations
02/04/2009
11:18:25 90.000 660.575 500K @ run calculations
02/04/2009
11:18:13 90.000 660.575 500K @ run calculations
01/16/2009
13:11:35 84.500 286.374 1MM+ @ (Est) run calculations
01/16/2009
13:11:25 84.000 297.254 1MM+ @ (Est) run calculations
01/16/2009
11:17:04 84.500 286.374 1000K @ run calculations
01/16/2009
11:16:56 84.000 297.254 1000K @ run calculations
The December XM coverts are still trading at 30.00 though… It would be very encouraging when/if we see THOSE start to head higher.
RBC interpretation: No matter what SIRI does, the stock is not going anywhere because it is being manipulated. Bank is saying even with financing the stock is more than likely going to R/S and dilute. I don’t think he really has a clue. And anyone who agrees with his comments also has no clue.