Five Positive Points on Sirius: Is the Street Listening? 116 comments
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With the economy being what it is, a feel-good economic story is hard to digest. It is a challenge faced by many companies, as they try to hold the line, maintain a positive outlook, and guide the street to be understanding of numbers that are better than should be expected, but not as good as years past.
Sirius XM (SIRI) CEO Mel Karmazin spoke with Reuters Wednesday, and much of what he outlined should be seen as a positive for the company. However, the street needs more than good intentions and words, and even when a company delivers on their guidance, as Sirius XM did in Q3, people still look at anything with a jaded eye.
Karmazin made several statements, which in normal economic conditions would be enough to get some traction in the equity. Wednesday, this news was simply absorbed with a shrug of the shoulders, and a show-me mentality.
POSITIVE POINT #1
Karmazin sees double digit revenue growth on a percentage basis in Q4. Wonderful news that seems to have fallen on deaf ears. In a time when other media companies are seeing double digit declines, Sirius XM Radio is still growing, yet no one seems to care that Sirius XM’s revenue is a polar opposite to all of the bad news out there. Perhaps it is too difficult to grasp that there are still companies that are in a growth trend at this point in time.
POSITIVE POINT #2
Karmazin is confident the company can refinance debt due in 2009. Perhaps this issue is the overshadow that simply refuses to go away. Karmazin has been expressing confidence with this subject for a while, and this issue is where a “show-me” attitude is likely warranted. That being said, I have always felt that the company will indeed be able to get the debt issue resolved. I would have hoped that it would have been done by now, but still, it should get done. For the equity to see improvement, an answer on the debt needs resolution.
POSITIVE POINT #3
Karmazin has no immediate plans to cut its subscription prices, even in the midst of the economic recession. At a time when prices are being slashed left and right, you would think news that they will be able to hold the line would be news that is well received. Instead, the street barely reacts. This is substantial news. This means that churn is stable. It means that new subscriber numbers are satisfying the business model. It means that revenue can continue to grow. Perhaps the lack of a profit from Sirius XM tempers this news a bit, but with the continued positive trend, shouldn’t the street give this a bit more weight?
POSITIVE POINT #4
“We did exactly what we wanted to do for Black Friday, which is not great news because we didn’t have high expectations,” Karmazin said, referring to the Friday after Thanksgiving, which kicks off the holiday shopping season.
While humble sales are not a positive point, the fact that the company was able to meet their expectations is stable. Had sales been shy of low expectations, the worry lines would rightfully appear. With the news being that holiday shoppers are being cautious, meeting your expectations is a small victory unto itself. On a side note, meeting those expectations did not come without an expense. Many retail radios came with free service for three months. Thus, you have a new subscriber, but no revenue just yet.
POSITIVE POINT #5
Perhaps the biggest bit of news from the Reuters Media Summit was Karmazin’s statement that Sirius XM Radio is not for sale. “We don’t feel that we need to be acquired,” he said. “You should assume the company is not for sale.”
With stock prices at low levels, one distinct worry many may have is that the company sells itself. Investors who believe in the long term outlook of the concept of satellite radio would potentially be looking at a situation where they would not participate in the success of the company in the years ahead. Of course, there is no guarantee that the company will be an overwhelming printing press of cash, given that it has at times been a printing press of shares. However, those that have maintained faith in the concept should be able to reap the reward should it come.
In the end, it boils down to what transpires over the next few months. Will Karmazin’s outlook be realized? Will the street finally be able to digest good news? Will satellite radio be successful in refinancing their debt? There are a few questions that seem to be keeping many hesitant.
[Reuters]
Position: Long Sirius XM
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This article has 116 comments:
---Karmazin says he is well aware of how the stock has performed, since he has put every dollar he has earned in salary back into Sirius shares.
and this---
"A lot of people own shares, and some people think that I've done the worst job since I've been at the company," he said. "It's not a good time to be a publicly traded company that's not making money, that doesn't have earnings, that has to get its debt refinanced."
He added: "There is nothing, nothing, zero, more important than us making money and getting through this 2009 hurdle."
www.reuters.com/articl...
thanks to the merger, sirius-xm is a monopoly with high barriers to entry (literally, these barriers being the satellites). siri sells a product which a large number of prosperous people now believe to be essential. with a little luck, siri will join the monopoly hall of fame: microsoft, ebay, google. doctorex says buy, buy, buy, and hold for $100 per siri share, maybe higher.
doctorex has spoken.
And by the way, there is one more thing: When the restructuring of debt comes due in February 09 -- all 300 million of it -- do the third grade math; 20 million subscribers at $10 a month equals a shitload of cash in SiriusXM's hands. Analysts can use charts and crunch all the algebric numbers they want to create bleak future outlooks but the basic facts remain what they are; with a healthy revenue stream of dollars pouring into Sirius XM's coffers each month, a billion dollars of debt is nothing more than a mere nuisance....
Scot's Slant
Thanks for taking the time to retrieve the full article...and point out these additional quotes--they have the most tell of all. I think they all add up to our current thinking about dilution for debt and reverse. Here's why...
>>---Karmazin says he is well aware of how the stock has performed, since he has put every dollar he has earned in salary back into Sirius shares.<<
This could be a little misleading (per Mel usual). His buy of 2M @ 1.37 = $2,740,000. So while that might be his salary, it's not all his bonus money--although maybe he includes all shares he's purchased at higher prices. I think he can accurately say bonus money is not money earned (if that's the word he used--I don't see this as a quote)...but the other thing that strikes me about this comment, is what we have said a few times at various phases of the decline. I still feel this buy, when he did it, was strategic for "down the line" or now, as they prepare for the 2nd leg of dilution to pay down debt (as I believe was always the plan). And I believe this because it makes sense that he did the ugly financing because he was unable even in July to get regular financing. Any banker would have been nuts to give him money given all the incoming XM debt and while the company was cash flow negative. To drill down even a little deeper on that, one would assume he could have even done a partial bank and partial bond, had he could--to be at least somewhat shareholder friendly. So I still believe this purchase in particular was part of the stage show, culminating on 12/18. I can nealry guarantee, his "in sympathy" buy will be mentioned at the meeting. Think about this...how would this all look if he HADN'T bought those shares? But also, bottom line, he made so much money in previous ventures, him sinking his salary into SIRI is nothing more than investment money (my guess of which either amounts to extra gains or valuable write-offs for him). He's most likely not living on his SIRI salary or bonuses.
>>"A lot of people own shares, and some people think that I've done the worst job since I've been at the company," he said. "It's not a good time to be a publicly traded company that's not making money, that doesn't have earnings, that has to get its debt refinanced."<<
This statement has little tell but is all true--on all counts. He has done a horrible job since he's been at the company FOR SHAREHOLDERS...for THE COMPANY, he's done just fine--and is about to do even finer in that regard as of 12/18 (IMHO).
>>He added: "There is nothing, nothing, zero, more important than us making money and getting through this 2009 hurdle."<<
This reconfirms something I wrote a few articles ago about his insatiable desire for FCF--at all costs (meaning regardless if it is at our expense). He has said once before in an interview that the Street will not let up on this company until it has positive cash. He's locked on it, and he knows there is only one way to get it (to eliminate most of the debt..and the only way to do that is to start the printing press). Again, I offer this was the plan all along. We as shareholders just were never told. We were sacrificed. And to be fair to the company, when a public company, any public company, is in heavy growth mode, lambs will be sacrificed for the better of the entire company and to ensure it's survival. And those lambs are us.
My last comment is tying back in Mels investment in SIRI. The differential between hs investment and most of ours is his is TOTAL play money with an indefinite time horizon. He can absorb what has happened to the SP and then after the reverse, with debt gone and the SP back up to 3.50, he truely believes through the growth of that new company, he will at very least get back to even within a few years. Shure46 mentioned this yesterday. Based on math of the current iteration of the SP, it will be well within this company's potential to get back to say 2.00 within 2 years (but of course, the SP will have reversed and will be * whatever the decided upon multiple will be). But I see that as very reasonable. And so, Mel will be at least back to his 1.37 and then some, toward his other buys. He will be fine in the long run. Esp. then if he does eventually take this thing private, he wil make out like a bandit there. He wil be fine. Shareholders are a much different story.
I think it is healthy at this point to assess the current situation on its own merit rather than with noise of the recent past. Meaning, we've all been through a very contentious and precipitous decline in this SP...which has been accompanied by a whole lot of animosity, consternation, and conjecture toward management, the situation, and the company in general.
The situation we face right now is one of being at the bottom. .14 - .17 is exactly one half step away from true beginning bankruptcy levels. We know this from past companies and if a current model is needed to verify, as I 've alluded to recently, you just need to look to Circuit City (now CCTYQ). On their BK announcement, their SP fell instantly to .06 that morning. They are curently back up to .20 as shorts have covered and bottom feeders are trying to make a buck or two. If and when this new dilution takes place for SIRI (which is essentially a bankruptcy without actually having to file, be instantly delisted, etc...), the current SP nearly has this event baked in. I believe shorts are waiting for this event, at which time the SP will drop to approximately .06 - .08 briefly, then it will explode to the upside as shorts cover up and make their final exit (and daytraders looking for quick easy money will pile in accentuating the move). Of course this will be an artificial boost, and how high to the upside we will go, no one really knows. It just depends on the action. But with EOY accounting, it is likely to be signficant--for a however brief period of time. I believe this to be the most likely scenario in the short term. I think positive Autos money decision causes a short move higher, maybe to .30..which is roughly where the SP should be at meeting time...which is much more respectable than today's paltry .17. But then that's a perfect set up for the stock to crash to the BK levels I speak of after dilution is announced as ratified, and that it wil be the way out of the debt problem. That's the short-term IMHO...
But then there's the long term. Personally, I'm getting a much better feeling about this plan than before. As said, before, I as many, were losing their shirts watching the stock methodically cascade downward. Tough to watch and especially at night on the brokerage page as wealth kept slipping away. But that's the past. That part's now done...as painful as it may have been to all. I guess my perspective is this. As said, we are nearly at BK levels (or similar dilution levels). It's clear to me at least what the company's plan is--to dilute one last time (now next to priced in), get rid of the debt overhang, hang on to and build on 4th Q COH, reverse this sucker and move on. With this kind of company, with this size of sub-base and revenue stream..it just might actually work on the other side...and work not only for new shareholders but help existing holders recoup some of this side's losses. I'm beginning to believe that since we've already made it to the bottom, there is nothing but upside remaining. The hard part was getting here. Now that we're here, it seems to me, you'd be crazy not to do this new share deal. Given the options, it's the best one on the table IMO. And I think the key to my thinking is that we are already esentially "in BK." So why not just do the damn shares, pay off the frrickin' debt and move on. Then, on the otherside, with no debt, I believe the new stock will be invigorated and received by the Street. The main reason is this. Other than the debt, this company is not sick. It takes a while to be able separate the wheat from the chaffe, when there is so much negativity going on and with so much distracting noise. But the reality is, this company is not sick. It's healthy in fact. EXCEPT for the debt. And where reverses (and dilutions) are concerned, it is important what exactly gets accomplished
...gets accomplished, just as in a BK it is equally important. So if this is all about taking out debt, and freeing the company from those shackles, this should be a positive in the end. I now believe, given the circumstances, ipsofacto, as we face them now, this dilution and reverse is the right way to do and will turn out to be positive for all long-term shareholders on the other side. Now will those who bought in @ $6 - $7 get back to basis...not for a long time if ever. But even those folks, if you can remain in this timeline for anther year or two, you should do alright in recouping a large part of your intial investment. That's what I think anyway.
In reality, NORMALLY, only sick companies (short of meltdowns like we've just had or hedge targets), who try to reverse out of their sickness get hurt on the other side. I have to say again, other than the debt overhang, I don't view SIRI as being sick at all.
Most likely, SIRI turns out to be nothing more than an extremly long-term play. Many of us mis-judged their timeline and have paid for it (for now). But it doesn't mean through time and patience with regard to the REAL TIMELINE, those losses through mis-judgement won't be avenged at least to a large degree...and I would offer in the not to distant future relatively so. I the Street accepts this restructure, as I belive they will once the debt is gone, you could actually see a substantial increase in SP in '09--provided the company sticks by and to their performance metrics...
Thanks for the well considered thoughts and you may be right about his plan to dilute to pay down debt. I do not think he planned on the financial crisis interupting the worlds financial markets the way it did. No One did. The two Fed lackeys, Paulson and Bernanke didn't see it until it was two late and there fell B.Sterns and Lehman, not to mention all of the other consolidation that is going on. Look around and tell me how many IB's there will be in the future that are not also Bank Holding companies. This was not part of anyone's plan IMHO.
I also am not as dire about the shares for debt and then possibly a reverse of 1 for 20 or 30 split. I said back in June and July, before all of this debacle, that for Sirius Xm, 2009 would be the Year of Debt Refinancing. I called Brandon M. out on his article the stating that Debt Was Not An Issue for Investors. Still, no way did I think we would be here in Dec 2008, but 2009 Debt issues, realizing all merger synergies, and maintaining growth in revenues were then and still are the key to unlocking SP appreciation. Mel at least confirms this. I still feel that he will not announce any debt restructuring until after the annual meeting as we have already discussed.
I feel that when he does announce the company's plans, even if the SP takes a hit, it will be short lived. Also the more debt that can be taken out the better. Feb and May 2009 debt is a total of $560 M, with $210 M left in Bonds and the $350 M in Bank Facilities. Taking this debt out all at once, while maintaining a healthy cash position, coming off of a solid cash building 4Q, would go a long way to building confidence in the company, benefiting the SP even without the RS. (the video attached to the article has him talking about maintaining a healthy cash position so paying debt off is probably not going to happen) In order to fairly price the value of the company's stock, we have to start to look beyond the 1st half, 2009 debt issues. We can safely assume that the debt will be taken care of and it probably won't be pretty.
I do feel that the anemic marketing performance to date, combined with the programming and content consolidation efforts, is a prelude to their launching the full product line of interoperable radios and option filled subscriptions Q1, 2009. This after all is part of the merger process to execute on their business plan. They have, along with other companies, given up on this holiday season. The FCC delays pretty much squashed their ability to role out an interoperable radio for this season. Consolidation of operations, programming, and advertising / marketing costs became their goal. Best of Both to existing subscribers is their Revenue Generator for the quarter, and cost containment the way to FCF in the Q4, 2008.
The folks here posting to date, including me, are focused on debt, share dilution and reverse split. Some go even further in wanting the B of D and Mel and company ousted (not my POV). To me, in the short term, the best news that can happen is that the Sun Rose on 12/19/08 at its predicted time, and that Sirius Xm is still in business without a BK filing. From there my expectation will be a lot more transparency on the company's operations and the announcement of debt resolution as quickly as is possible.
I think that you are right on target in identifying the internet as the next real battleground fore media companies. Companies like Slacker for wifi portable devices and Hulu, NBC owned, for internet TV content are showing a glimpse of what is coming down the road. It is absolutely vital that Sirius develop the very best in internet, wifi capable, content software, for a variety of innovative devices. My opinion is that they should be a content provider to many manufactured devices, and utilize their internet product to access world markets. Music library services and advertising on the internet will be huge for the very best content providers IMHO. The open access requirement by the FCC has already cleared the way for them to focus on Content and Software to Deliver that content. The roadblock that will be there for all competitors is Royalty costs, which might be mitigated by finding ways to partner directly with Artists like the record companies use to. Even telephone services are now on the web. As others have said Satellite Rad will give replace by WiFi, I feel the markets will determine the best hardware to provide premium content to a variety of platforms of technology.
Satellite offers National Coverage where WiFi still falls short. Having devices in the future that can do both is not out of the question. Early Cell Phones were analogue and digital network compatible as bridge devices between the two transmission types. Innovative developers of hardware / software can do the same with WiFi or Digital Sat. devices. In the end the market will determine what hardware will look and feel like, but Great Premium Content will be around forever. That Content is what Sirius Xm needs to concentrate on for the future.
Your right that the debt has always been there. This 2009 debt was the result of the last bottom in SP in 2003. My feeling right now is that the debt is so close that investors can't see anything else around it. Once removed or restructured, even with some dilution (not 1 for 50), those that are in on the other side will have a brighter future. By the way with the Autos on the Hill today seemingly receiving a warmer welcome, I bought back in with very little reserve at .1632 this morning. Over the last two months, my Playing With Fire, has me with an increased position of over 25K shares with the same dollar value. I had to rotate in and out completely twice to get their and for now I am done playing.
THE BAD
The all exhalted "Mr. W" of Goldman Sachs led the Parade to current cesspool price, with a constant downgrading.
The Crazy Uncle (hartlieb) delayed the merger six months due to discovery on interoperability.
The Domestic Auto Companies have lost sales year over year by more than 30% (being conservative).
The Credit Market is still not giving out loans (unless you already have the money).
THE GOOD
"Mr. W" has found other avenues of focus to tout pessimism.
The merger is completed, and "Best of" provides service to the Merged consumer base.
Sirius is on target to increase their sales numbers despite Auto numbers
LOL. . . . .I bet you thought I was going to say something good about the credit market.
My father lived through the depression and related that the best way to survive was to "ESCAPE". The "ESCAPE" was in the form of entertainment. That entertainment via movies & radio was the topic of discussion at work, and brought smiles on his co-workers. I believe that there is no better time for an entertainment provider to grow and prosper.
Smiles to all. . .
.and Killer. . .
give the dog a pat on the head, it lowers blood pressure!
Just one question........ The pat on the dog's head lowers killer's blood pressure of the dog's.......
Agreed. I assumed like you say, Mel had purchased previous shares in the open market along the way. As said, IMO, he and the company seem to have been on a timeline that most of us were not considering (with a particular strategy of growth that involves heavy shareholder burden in the short-run). Although, as I mentioned recently, there was plenty of evidence of their use of equity to satisfy costs in the past and it was one thing I neglected to look at as important when considering timing of investment. More live and learn. There has been a lot of noise in which to cut through trying to figure this out. But it's easy to see now with all the noise stripped off, that the plan, at least as it seems current now, should be successful and helpful to some degree at least, for existing shareholders. Personally, looking at how it's all turned out, SP sitting at the bottom, new shares announced, I don't know why they just don't come out and say publically this is the plan and give details. What could happen, the stock goes to .10? That would hurt no one at this point and would be great transparency. The market has already priced it in anyway.
cos1000...
Thanks also for your insight...
I don't mind saying, as you believe, that this may not have been the plan from the actual get-go. Although, as said, one has to wonder why they didn't do bank in the first place...in July. My only logic there tells me they couldn't...which is what drove the IB route. And if they couldn't do it then, even in better economic circumstances, I don't envision them being able to do it now considering the same debt load. But I do agree, given the situation of the past few months, no one could expect this exact market scenario. I listened to Cramer last night as a guest on The Big Idea show say he thinks without the Lehman BK, that the Dow would be at 12K today. He and others believe that letting Lehman go (due to apparently teaching them a lesson), undercut the whole economy (which makes me a little sick to my stomach since like you say, Lackey Paulson, seems to have actually f'd the whole thing up (well beyond all his other stumbling and bumbling). Knowing that Lehman was a huge player in the CDS flow, it certainly seems probable.
But I guess given if Lehman were still here and the Dow were at 12K, most likely SIRI would be more like .50 - .60 right now. But...when thinking about it, given the company's proclivity over the years for using shares, (and that they were most likely shut out of Bank financing in July), I think they would always have been destined to go this route of dilution and reverse to better their situation and to be able to concentrate on growth (at some point). The debt is just too big a rock tied to the company and holding an otherwise healthy company back. I think in some ways, we're better off the economy has done what it has. If the Dow were at 12K and the SIRI SP was at .65 right now...I think we would be in a slightly different mindset about such a dilution and reverse (as we were when they first announced in the Proxy at .40 something). Then, we were still trying to hang on to 1.00. Now at the bottom, it's easier to reconcile the whole thing and see the benefits...IMHO...
I listened to confirmed Bear Bil Fleckstein yesterday on Fast Money say he's all but covered all his shorts and is now on mainly on the sidelines (and eyeballing long positions albeit short-term--but longer term than 3 days!). He confirmed that shorts have had their day (ya think!) and it's dangerous now for full on shorting. Hence, the market change in tenor this week regardless of the reported bad news. Finally the market is starting to look past the bad news, as the past, and more money is starting to flow long than short. We certainly need a break!!
Your buy today I think is not unwise. I'm prepared to do the same at some point here. Buying in @ .16 - .14 leaves little to the imagination...I would still consider leaving a little powder for my possible last take-down scenario below .10 very briefly after shares are ratified. IMO...
Yeah I tried to commit to myself that I was done playing until after the meeting, but the reality as I said yesterday, is I am playing off of the charts while not missing any upticks. Who knows how long I will hold this position? Right now their really isn't much momentum and I think a deal is due out of the auto negotiations on the hill. I would rather be in than out right now.
I think your right about the financing and a majority of the converts are now held by GS so I don't think he's in a hurry. All the interest payments on the paper are done and all that's left is paying off the principal.
I agree. At this point I will always leave in at least 50% of my shares at any give time. I currently have 22.5K. Then play the ticks otherwise...
163888...
You're right about the SP and timeframe. And as far as Mel and his cash...absolutely, cash is king for him right now..which is why I believe he won't use any of it to pay debt. I will say, I will be shocked if they don't just wipe out the entire '09 debt with the new shares straight-away and reverse the SP. Then imagine that completed, and they announce a decent Q in Feb with no debt overhang. IMO, this would be a great way to start the new era...
btw... I am watching the Hill testimony on CSpan as CNBC isn't covering the whole day...
time is right to renegotiate talent fees, as all companies are cutting outlays,
and stop spending money the'y don't have, the debt problem will never be solved. It seem only logical to explore junk bond sales. They are an
alternative.
The fiscal policy was never on sound footing because the debt they were taking on could not be realistically payed back on the potential
future revenue growth. That fiscal thinking has to change.
The marketing has to also change. Their ads geared to older folks has to
start including younger generations who spend more time in their cars.
The revenue stream is good news. it's solid. It's just a matter of whose
hands it's in and can they be trusted.
Mel's pay compensation would have materialized at $4. He's no fool
when he took that compensation at the end of 07. The ps for much of
07 was around $3.90. He knew there was a good chance he could strike it. He didn't plan on the meltdown, but i'm sure he would have taken the
money at $4. Out of his 25 million shares, how many did he actually buy.
Are they foxes raiding the hen house, or good sheperds looking after the flock. I guess we'll soon enough.
Yeah, good catch. It was a spike I have to believe at the open because there was a high spike then @ .22. But...this sucks because it registered as a legit trade and unfortuntately has registered as a 52wk low. Which is false. So you'll now just have to keep in mind for charting purposes, that .14 is the actual 52wk low in earnest...
Next you are asking were did all the debt come from, were have you been it was and still really is a start up company they just started to get subs 5 years ago. The cost of the OEM's alone are at this point over 2 billion to subsidize just those radios ( that does not even count the retail side especially in the beginning when the cost of the radio was way more then what they were selling them for, go look at the SAC numbers back then most of that was because of the radio cost. That is small though when you have already spent amost a billion (855 million) on each satellite, lets see how many have ether been launched or been built so far is it 8, 9 or 10, there is another 8 billion for you. *All numbers are for the combined company. Then the cost of content. I say it is amazing they dont have more debt then they do right now. When you figure in the cost to start the company 3 billion in debt seems like a small number.
good thoughts. I am very with you in that after this restructure, they MUST be more more mindful of their bottom line...Yes, as if they are a real company! I can now accept this last restructure as one that helps complete the leverged buyout...and as I see it, given it is already essentially priced into the stock, it will also get current stockholders back closer to their original basis. Hopefuly there will be little delay post-meeting, they register those 3.5B shares and get busy. Doing so, will lift the burden of conjecture, fear, uncertainty and debt...all at once. From there, even beginning with the Feb Q report (which I see is currently listed as 2/23/09), the new/old SP can begin grow in earnest.
As you say. Then from there...if they want to be considered a real company instead of some perennial spec play, they must install a bottom line that they can pay for--period. That will make this whole painful experience much more palatable for all. My guess is that at some point up the road, maybe in 2010 (when Howard comes due), they will be forced to go private in order to reconcile, at least, the talent fees they will be facing (includng MLB, NBA, NASCAR, et al). I'm not sure from the monster they have created in paying talent the exorbitant fees, they will be able remain public and viable without killing shareholders again as those come up (not AND stay CF positive).
But in the meantime, I see decent opportunity for shareholders in the near-term post restructure to recoup substantially. In addition, on the trading side, we also have good opportunity here in the next 3 weeks to recoup during the volitility I expect on the current SP.
It was more or less a rhetorical question about where the debt came from. My basic point is the way they structured the company from the beginning.
Without fiscal responsibility a company can not just keep spending hoping
the subs will pay off the debt. Oil companies drill and drill, hoping the big
one pays off for all the drilling. Sure there is speculation but they know it will be returned. When the start up costs for oem's, and sats are running so high, why are they also paying out so much in talent and salaries. Their fiscal planning was based on the spec that the subs would increase
to a point where it would begin to offset total expenditures. But their projection models from year to year indicated the spending was much greater than the return would be from revenue's. My basic point is that
by asking a rhetorical question we could get to the bottom of how their
fiscal business model will work based on knowing how we got to where
we are at. The analysis shows they are somewhat reckless in what they spend money on. It could be they always knew they could go back to the well for more. My concern is, are they going to continue the same pattern
or tighten up the ship and take some of the burden on themselves or just keep passing it on to stockholders.
I agree it's a trade, but unfortunately it throws off the general statistics. That's why to all, the best method for qualifying SP is the charts...not the profile numbers. There, you will also glean split info etc...and spikes will show up as just that...
What gem of a news item caused the Dow drop off the cliff? I leave for 15 minutes and we're down 300 points!
Good article...did you have to use THAT picture of Mel? lol
Let him chew on winky a bit longer, but dont let him swallow the meat.. Don't forget that turkey's give dogs gas!
Understood. Give Mel the benefit of the doubt. You're his cheerleader on this blog. Let's say he's done a good job. Now, let him come out and give
us his specific details on what he exactly plans to do, how he is going to
raise the money (details), how he is going to use the money, how he is going to restructure, how he is going to cut costs, the advertising and
marketing plans, his plan to get the ps higher, and get the fiscal house in order to show the balance sheet will be better in a year. Just some real
specifics.
I do this all the time. We have a film corp. to run. I 've set up and run other corps. and business entities. I manage a large investment portfolio.
As honest brokers we share all the details and try to hit our marks. We don't hide and give perfunctory answers. His hiding the plans in the shadows does not create credibilty. We're not idiots, we can handle the truth. Just give it to us.
>>> after all these months of debt finally being a topic at the forefront, Tylrer still "FEELS" it will be resolved. no substance - PURE FANTASY.
If Mel didn't repeatedly say he's "confident" about the refi, we'd already be at 0.01 --- that's the ONLY reason he's saying that. He's not confident at all. Certainly not confident about re-financing and while also protecting the common. that's an impossibility right now.
at the expense of the common AND at HUGE rates is the reality. 25% on $1bil is $250 mil a year in debt cost. In a more perfect credit market, that's what SIRI would pay. but in reality, they will also have to give away company upside to whomever the money is coming from. Maybe a 20% covert.... lol.
Amazing how, after all this time, the debt sitch is going to be "fine" in Tyler's and others' eyes. Head in the sand, blindly following Mel's words.... STILL. unreal.
I first mentioned the debt well over 6 mos ago, when NOBODY else was mentioning it here. Now it's at the forefront and it's still not a problem in Tyler's (and some of the rest of yours') eyes.... PURE. BLIND. FATIH.... still. unreal.
[disclosure: I got back in in the $.20s in the small hope of going private.]
Mel's confident he will refi with shares lol. That's THE only refi on the table IMHO. But...now that the stock has fully crashed to near BK levels, just do it. No big deal any more and now a great move. Print the money, wipe out the debt and let's move on with this thing. Faster that happens, the faster people around here will get some of their money back.
Just reading this string at the end of the day. I understand where you're coming from but you don't have to have bought at $6 to get hosed. Unless someone bought-in at 50 cents (or thereabouts), post RS it is unlikely that someone will "recoup a large part of one's investment."
I bought at an average cost of $1.17 which would mean approximately a 700% percent recovery from $.17 (that is, to get back to $1.17). If the RS were to occur at $.17, the price post split goes to $8.50. Seven hundred percent upside from 8.50 means the price has to go to $59.50. If someone bought at $2.00 the price would have to reach $93.50.
I suppose it could happen and you didn't say what "large" meant in you post, but absent some huge break through or innovation, its going to be long hold.
hit the wrong button..to finish:
>
> ...gets accomplished, just as in a BK it is equally important. So
> if this is all about taking out debt, and freeing the company from
> those shackles, this should be a positive in the end. I now believe,
> given the circumstances, ipsofacto, as we face them now, this dilution
> and reverse is the right way to do and will turn out to be positive
> for all long-term shareholders on the other side. Now will those
> who bought in @ $6 - $7 get back to basis...not for a long time if
> ever. But even those folks, if you can remain in this timeline for
> anther year or two, you should do alright in recouping a large part
> of your intial investment. That's what I think anyway.
Your numbers are correct and yes, large part is relative compared to the nothing we all have now or would be destined to while still having all the debt overhang over the next year and two. Refinancing even the 210M with another facility @ 8% doesn't much help the company's debt picture. At one point I was for it, but now realize that it would have little effect on the way the company is viewed going forward--they would be shackled and relegated to .40 - .50 land for good. I think their best shot at this point, given the place in which they find themselves, is to clean house and try a new beginning. In that scenario at least they will have a chance to run. The Street loves healthy companies with cash and no debt...and in that case they will pile in. On the otherside, you could see the same kind of run (due to the new clean slate) as when it went frm $2 - $9 on the Howard/Mel news. If that euphoria happens, you wouldn't see the equivalent on the 50 side (which would be $400/sh but you could certainly see $45 - $60 in a good market. Take a look at a 3yr chart for Akamai (AKAM), in whom I have invested in the past. What you see there is when you had a healthy company with good earnings. If you look at their 5 year chart it's even more impressive. They never reversed and grew their SP organically from where I first bought them at 1.50. They ran up into the high 50's...before crashing (esp. since this past June). But I think without debt, SIRI has the same chance to reach such heights in a healthier market next year or two. So for you, that would be about all your investment and a decent chunk of the 2.00 investor.
Without this restructure, SIRI is just DOA, IMHO. They are as good as in BK right now. If they made it official (which they won't, I'm not saying they will), you would be done period with no hope of recouping anything except what would be left of the short exit (and of which you still have a chance at a piece of anyway if you wish to explore it). As I have said, they have loaded themselves down with ungodly debt and have done nothing for years but pay for things with shares. When Mel pulled the trigger on the buyout (already facing heavy debt issues with 1.5B shares out), he created a very tenuous situation by anyones standards. Throw in the downturn and I only really see one plausible way out--which is the way it appears he's going. And keep in mind, timing is everything, which is why I think they should effect this restructure asap. Remember, there are TRILLIONS right now sitting on the sidelines waiting for new investment homes. Starting in the next 4 weeks and beyond, that money is going to start flowing back in. Why not make an attractive place for a chunk of those funds to pile into? Given your 1:50 numbers, 8.50 can become $35 - $55 easily if the company makes good on their metrics prognostications over 2 years. People will want to buy in.
I LOVE MY SIRIUS!
Love reading these SIRI blogs, thanks guys!
If it keeps going lower, i'm buying more!
After the 15th im loading up on energy and mines, oil and agriculture.Natural gas will sing....
Just a point that I noticed in reading your discussion of Sirius trading at bankruptcy levels right now, and then using CC Circuit City as an example, trading at .18 / sh after its filing. Doing straight line comparisons of companies SP, without taking into account the amount of shares outstanding is a bit misleading. CC has 166 M shares outstanding, while SIRI has 3.5 B shares. A more relative straight line comparison should then equalize SP accordingly. With CC at .18 / share and SIRI having 21 times more shares outstanding, at .18 / share, SIRI has a current equivalent Stock Price 21 times greater than CC or $ 3.80 / sh, roughly equivalent to a 1 for 20 Reverse Split. This is why in the past I have said that dilution of Sirius is already in the SP at .18 / sh.
As for the delution and reverse split Mel has already said that they need the delution to have shares on hand because the company may need to use them in refinancing and to use in day to day operation cost (it is no secret that most of SIRI workers are paid partially in shares (stock options)). Sure he did not say what that meant but it means one of 2 things. Ether he needs them to loan out (so the lender can go short to protect their investment). or he needs them to sell and use the proceeds to pay off the debt. As for the RS he said that would only be used to stay out of the pink sheets. I am not a cheerleader for Mel I just know exactly what he has done before SIRI and while at SIRI. I will set the record straight even if someone were to falsely accuse you or anyone else. My point is, there is not one credible piece of evidence that Mel lied or did anything but what was good for the company and shareholders. basically tring to keep the company going in very very hard times for all companies that have debt that needs to be refinanced. From what I know of the man he is looking for the lowest cost deal he can find and will not toss out the baby with the bath water because he has a PPS that has been falsely brought down to these low levels. I believe he thinks the company is strong and in reality should be nowhere near this PPS. I will just say this, I sold most when the PPS hit 5 through 8 because while I thought Stern and Mel coming to SIRI was great it was not 5 dollars a share great. Just like now while I believe things are tough for SIRIXM they are not .16 a share tough. Just wait till the FCF for the 4th quarter comes in. Everyonge was pissing and moaning about how they did no advertising, I was thinking go Mel save the dollars and put it towards the bottom line. There is one good thing about the deals with the OEMs, that is that if they get most of ther subscribers through them then they really dont have to advertise.
Your point is taken and appreciated. I was coming from the place of when a public company goes BK, their share price usually instantly drops to about .05 - .10 (or wall street worthless) regardless of their shares outstanding. As in Lehman, who dropped to .10 that morning, Cir City dropped to .06, I remember others like FAO Shwartz dropped to under .10, Worldcom dropped to .04 I think. But in all cases, do to the short unwind and bottom feeders, the price will rebound back to around .30 before then drifting back. When CC filed on 11/10 they opened at .0605 then 4 days later on 11/14 they hit their high of .30. Worldcom did the same and squeezed back up to about .35 (as I remember watching live in disbelief, because I was much less saavy in those days lol).
So I'm just going by historically where I see many companies land on BK news. I do agree that I also feel like the dilution has already priced in much of the upcoming dilution (which I feel is the equivalent of a BK, without the downsides of actually having to do one). I think just given the action and proclivity of the stock, I suspect they will take it down a little further on the news for a brief takedown (just because they can), but then bounce. But I totally agree that most of the dilution is baked in already.
The only wildcard is what comes of the Autos news. I think it's hard to predict what will happen there now that the Hill vote won't be until next week (now the week before the meeting). It may now just be a few penny gain from that with the attention all on the meeting and the expectation of dilution. But as you say, I also feel like this is the relative bottom with regards to dilution.
LIke I've said before, I wish we could have two parallel sceanrios play out. Those who would just allow BK's like that A-hole Shelby and others, and those who understand reality. and whateverhappens in each scenario, it's supporters would have to live with the outcomes. These clowns talk a real tough game without a clue about ramifications. The guy from Moody's yesterday said more than once, a BK now in that industry would be catastophic. That should be it. That should have been the end of the hearing. They brought him in so they must believe his opinion is credible. Yet it's all just theater because even after the guy says catastrophic, they still say no to a bridge loan (unles the 3 CEO's give all the senators a BJ). It's so sad it's funny. And I will say again. WHERE IS LACKEY PAULSON AND LACKEY BERNANKE IN THESE PRECEDINGS? SHOULDN'T THEY BE THERE OFFERING SUPPORT AND SPEAKING TO THE STABILITY OF OUR ECONOMY? I can't wait until these clowns are gone.
My additional point is that a company's SP is not does not correlate to whether or not it is, or will be in Bankruptcy. Saying that the stock price of a company is the equivalent of a Bankruptcy leaves out way too many other considerations to make the comparison relevant. You know what they are: defaulting on payments to creditors and vendors, declining revenues to support the business model, deciding on the type of Bankruptcy (chapter 11 vs 7), the oversight of the courts to regulate the reorganization or sell off of the assets, who gets paid and who doesn't, are just some of them. None of these issues are presently relevant to Sirius XM. Yes the SP sucks, but the underlying business is still paying its bills, growing in revenue, and otherwise viable.
IMHO, talking about this company in relation to other companies that have already gone Bankrupt, utilizing the company's low stock price, which does correlate to the massive share dilution proposed and at hand, is not constructive and confuses the issues at hand. I am hopping on this point because of the negative image that using BK terminology has on this company and investors who may not know the difference. SP effects many things that impede a company's ability to operate favorably in the credit markets seeking financing, in maintaining its listing status, attracting solid institutional investors and partners alike, but it DOES NOT correlate to Bankruptcy.
glad you checked in. Good luck on those trades. Considering recent events and the delay in the Autos news (which is now being sujected to indue and unfair scrutiny), I think the focus now is all on the meeting. Which means, SP should hold steady to slightly up or down. I think now it's a foregone coclusion by most remaining inst. shareholders so it becomes less of an outrage at this point. In fact, there's little for them to do now than go for it. Selling and taking the heavy loss now is the only more unreasonable other option.
I'll say this. Regardless of how all of this came about or who planned what (or didn't)...it just seems like this is all playing into the company's wheelhouse pretty neatly. For me, usually things that work out this perfectly, usually don't just happen randomly. But I'm open to keeping neutral on how we got here and where this is all about to go. I just hope for everyone's sake connected to this company, that once they do this, they use the opportunity to become bottom line responsible and stop spending (printing) beyond there means. They've now grown exponentially at the hands of the shareholders. From here, enough hyper growth mode, hit a value period and grow at margainable and sustainable rates. In otherwords, now over the next several years prove you're actually viable, please.
Lackey Paulson is China right now...... Nice trip on the Taxpayer dime. Something about a playing a Lyre while Detroit Burns comes to mind. I couldn't agree with you more..... its all Theatre and because the autoworkers are part of the middle class, and we know that middle class destruction is important to their long term plan, they must be humiliated for every dime lent and charged outrageous amounts of agony as they utilize the "help" from the Fed.
Completely agree on the semantics and I'm not intimating they actually are filing or are even considering it. As you say, there are many negative stigma's that go along with filing that are deliterious on many levels. So no BK. I'm merely relating a few issues to a likeness. One, in what the Street has priced in. In either a 3.5B dilution or a BK, the current SP is a very similar result. The other is, if Mel pulls the trigger and wipes out debt with shares/reverse, that is another equivalent of what happens in BK (though in a different way)..but the result is the same...your debt gets wiped out. But as said, by going this way (dilution) they get the benefits of wiping out debt with out the market negatives of a BK such as immediate delisting, negative symbol stigma, etc...a la CC. Not to mention non market hassles such as potential liquidation, court supervision, all those complicated things (depending on which chapter). But as I have said, given all angles at this stage (esp. with the SP price as is), I feel like the dilutive restructure is the best option by far. Mainly because SIRI is actually a healthy company (great subs, 3B top line, never defaulted on creditors), other than the debt load and could benefit from this move greatly (albeit on our backs, which by now is what it is--it can't be changed). IMHO, their current debt is just too untenable (esp. in this current environment). Hope that clarifies my position.
well said...
I hope it happens as you lay out. Its a long hold but what else is there to do at this point - at least that's how I look at it. I'm in it to zero if we go to BK (not that much left to lose from .17) and in it if it goes to $50. The difficulty for me if it plays out the way you say, is not selling if the SP goes to $25-30.
On Dec 04 09:15 PM sl62 wrote:
> sre...
>
> Your numbers are correct and yes, large part is relative compared
> to the nothing we all have now or would be destined to while still
> having all the debt overhang over the next year and two. Refinancing
> even the 210M with another facility @ 8% doesn't much help the company's
> debt picture. At one point I was for it, but now realize that it
> would have little effect on the way the company is viewed going forward--they
> would be shackled and relegated to .40 - .50 land for good. I think
> their best shot at this point, given the place in which they find
> themselves, is to clean house and try a new beginning. In that scenario
> at least they will have a chance to run. The Street loves healthy
> companies with cash and no debt...and in that case they will pile
> in. On the otherside, you could see the same kind of run (due to
> the new clean slate) as when it went frm $2 - $9 on the Howard/Mel
> news. If that euphoria happens, you wouldn't see the equivalent on
> the 50 side (which would be $400/sh but you could certainly see $45
> - $60 in a good market. Take a look at a 3yr chart for Akamai (AKAM),
> in whom I have invested in the past. What you see there is when you
> had a healthy company with good earnings. If you look at their 5
> year chart it's even more impressive. They never reversed and grew
> their SP organically from where I first bought them at 1.50. They
> ran up into the high 50's...before crashing (esp. since this past
> June). But I think without debt, SIRI has the same chance to reach
> such heights in a healthier market next year or two. So for you,
> that would be about all your investment and a decent chunk of the
> 2.00 investor.
>
> Without this restructure, SIRI is just DOA, IMHO. They are as good
> as in BK right now. If they made it official (which they won't, I'm
> not saying they will), you would be done period with no hope of recouping
> anything except what would be left of the short exit (and of which
> you still have a chance at a piece of anyway if you wish to explore
> it). As I have said, they have loaded themselves down with ungodly
> debt and have done nothing for years but pay for things with shares.
> When Mel pulled the trigger on the buyout (already facing heavy debt
> issues with 1.5B shares out), he created a very tenuous situation
> by anyones standards. Throw in the downturn and I only really see
> one plausible way out--which is the way it appears he's going. And
> keep in mind, timing is everything, which is why I think they should
> effect this restructure asap. Remember, there are TRILLIONS right
> now sitting on the sidelines waiting for new investment homes. Starting
> in the next 4 weeks and beyond, that money is going to start flowing
> back in. Why not make an attractive place for a chunk of those funds
> to pile into? Given your 1:50 numbers, 8.50 can become $35 - $55
> easily if the company makes good on their metrics prognostications
> over 2 years. People will want to buy in.
Crystal Clear and I know that you weren't saying that Sirius Xm was in bankruptcy, just using a stock price comparison on how dilution of shares to restructure debt and bankruptcy have similar outcomes to Stock Price. Even though dilution and a reverse is not desirable, as you say and I agree, the elimination of debt would make the company a more healthy prospect for the future. The only other Key Point is that with dilution and a RS, current shareholders do remain in place on the other side of the RS. With a BK, current shareholders are usually, not always, wiped out completely under the BK restructuring.
The other point is that the debt being restructured verses eliminated will not be very attractive to the street, especially with poor terms. They will have to pay down some debt or else the new debt cannot be in the form of Convertible Bonds. Shares for debt elimination is the only dilution that will eventually lead to a healthier company in the future, and is the scenario that I have assumed in saying that the dilution is already in the stock price. Maintaining the same level of debt on worse terms with more Convertible Arbitrage to the Bond Holders available will be the absolute end of the Common Share holder, even in the future. IMHO
This might be what cos1000 was talking about. I've been trying to make clear in my statements that IMO, BK is NOT, I repeat NOT on the table here. The dilution is an alt to that type of action (and one much more preferrable to a company like SIRI, who besides their enormous debt, is what I would call a viable, healthy company, pays it's bills, etc..). Though, a viable, totally healthy company NEEDS to show sound, fiscal responsibility across the board (including the debt it takes on and HOW it pays its bills) at some point IMO. And I hope that point is coming for Mel and company after this ordeal. But in general, a dilution as may be upcoming, is NOT a BK by any sense of the word. It only has a similarity here in that both would wipe out existing debt. The only other similarity by comparison is where the Street has currently priced this stock. But by most other definitions, BK and dilution by equity are very different animals.
But to my original point to you, I do think in a better market, with their debt gone and continued performance on their guided metrics, post reverse, the company has a much better chance at rising legitimately than in this current mess. And as you say. There are few options for common holders at this stage and the new future looks brighter than the current or past to me.
On that same page...
Which is why I would like to see all this happen straight-away post meeting. I think the quicker they show the Street, they are now a desireable balance sheet, the better. Considering the recent market beatdown as a whole and with trillions right now on the sidelines waiting to be re-allocated, I think the faster the company gets this debt and reverse squared away, only helps them in the current timing going into '09 as all that money flows back in. They could benefit significantly and attract chunks of the new money coming back.
I agree that the sooner the better, right after the meeting on the refinancing and the RS is still a matter of Mel's publicly made statements. Without the threat of being delisted from NASDAQ formally, I believe he would have an amount of explaining to do a RS right after the dilution. I am not saying the a rationale for the RS couldn't be made at that time, but it would go against the Tool In the Toolbox explanation given so far.
THAT'S the problem ............ Huge cash flow , but still negative
( my numbers are not for factual accuracy , but just a general opinion of the situation )
On Dec 05 12:20 AM relmor wrote:
> Im playing SRS right now. DOW might make new lows before next friday,
> and if it does this stock will near triple, as it did last time the
> down went into 7500 range. Homebuilders have been propped up for
> days now. Looking to tank. This has nothing to do with Sirius, so
> sue me....
> After the 15th im loading up on energy and mines, oil and agriculture.Natural
> gas will sing....
Good Luck!
Tony D
Based on what you have said then, the plans have posted, published and stated for the street, stockholders and investors.
From your interpretation of this knowledge, which according to you has been deciminated without inaccurracies, then please state, in your words what you think they have told us. Just go step by step what you think they will do. Then we will all know the scenario.
For instance, are they going to do RS at 50:1, 40:1, 30:1, etc.
When are they going to do it.
When are they going to do the dilution.
Now, according to you, they have told us they will do this, how much money do they > estimate< they will raise. Just an estimate.
Now, they have said, supposedly, they will pay off debt from new issues.
You are definite they will use the money for debt, and not expenditures, salaries, and new talent or marketing/advertising, or sac.
They also are aware that after RS most stockholders who are in at ,say, $1.50 and up have little chance to recoup because ps has to go at $50
to $100 to recoup. So, you say, they know this, and it's the price everyone has to pay in order to survive and get profitable for future investors and management pay with stocks. They have told this to the
current stockholders. Of course, there is always the possibility the ps
will go that high. But they are aware the SIRI is shorted heavily. So they
are aware of the market environment. And yet these are the plans you
said they have spoken of somewhere. Just want to get your scenario because you said they have made this known and you know how this will play out. I just want to make sure we get it right because you said it's all been revealed truthfully and so you shouldn't have any problem laying out how you see the scenario based on what you believe they have said.
Because, otherwise, all the discussions on this blog about what might happen were for nothing, because we should already know what they are going to do. According to you they have told us. So just for the sake of the bloggers here, could just go over it again.
The scenario is.........
About RS, dilution, new issues for debt and restructuring, ad plans,
renegotiating fees, pay compensation, sac,revenue growth, subs
projection,and cutting oe's. In this way, what you tell us they have said
will give us a projection model how the balance sheet will look in a year.
And this plan and scenario you will tell us has been put out by them and we will all be out of the dark. And then the ps will go up because this
scenario will tell the market SIRI will become mucho profitable. Thanks for
helping us out.
I have a feeling that they are going to roll the whole thing up in a package. Don'f forget, in writing, they reserve the right to change their strategies in the best interest of the company. I think that will be included in their explanation rhetoric in a few weeks time. IMHO
btw..I had to leave and missed the remainder of the House testimony...did I miss anything? Thanks.
The second panel of "advising experts" all raised their hand as one congressman asked them if bailing the auto industry out was a matter of the the country's national security. Barney Frank said it was clear to him that something was going to have to be done, the details needed to be worked out. So No, you didn't miss anything.
I want to know where they said that as well....... but I don't hold 163888 accountable for the location of that information. As a matter of fact can I get that for every company that I invest in??? LOL
I know, I was just being a little sarcastic. Because 163888 always stands up
for management that they've been forth coming and laid the cards on the table. I just don't see it. But 163888 seems to think they have been totally truthful about future scenarios and we've all been informed. So I was just asking for him to tell us in his own words. But thanks, I know you're right.
Also thanks for all your good posts. I doubt 163888 will give us anything anyway.
By the way I don't think you'll be unhappy with your buy in today. It does look like the Hill will bail the Autos out, with some pretty severe hooks in. They were talking about changing the legislature to allow the emergency government bailout position (Taxpayers) to stand in front of all Senior Secured Debt, without going through a BK. That would be precedent setting and change the way creditors might look at industries considered critical to National Security interests. Defense companies come to mind..... In the end the Automakers will not fail because of a bailout denial. I think that given the unemployment numbers this morning and this inevitability, the Markets in general turned around going. With us our going into a weekend, it speaks well for investors being willing to absorb a little more risk. It also may mean that we are not going to retest the recent lows of 7900 anytime soon. Bad news is not taking the markets down may be a sign of some better numbers moving forward.
I understand the frustration believe me.... I have to admit that I was a bit blinded in August with the Ugly financing. I drank the Koolaide and believed that management's transparency would be forthcoming in providing the plan to take us out of this mess, but alas the info was not to be and my portfolio turned to dust. We have all been left to fend for ourselves in this morass that has become this economy and our investments in general.
I have come to realize that now, more than ever, an individual investor is left to his / her own best research and then risk tolerance. No one could have told me that I would have churned my position in this company two times to accumulate shares since the Proxy Announcement. I am glad that I have because it will lesson the blow of dilution and a reverse down the road, but for the new comer to the market, it is a treacherous path and not recommended. Too much emotion and not enough objective information to rely on. That is why I try and look at charts and graphs, not that they are flawless indicators of what will happen, but they are objective data of what has transpired. Anything to remove the emotion is welcome at this point.
Oh well, thanks for your well considered thoughts, sprinkled with some solid sarcasm, that keeps us all straight on what is going on here. awaiting us in owning this company and have
Understood. Good luck and have a good weekend.
No hard feelings to 163888, Peace
That's been my limited expereince with reverse splits, the stock price was driven back down after RS and company was acquired at price that was pennies on the dollar to me. Obviously, I'm hoping for your scenario.
I am a happy believer in the product, I just leased a new car for three years and had them install satellite radio ($700) and bought 3 years worth of Sirius. I'm doing my part. . . .
On Dec 05 11:17 AM sl62 wrote:
> sre...
>
> This might be what cos1000 was talking about. I've been trying to
> make clear in my statements that IMO, BK is NOT, I repeat NOT on
> the table here. The dilution is an alt to that type of action (and
> one much more preferrable to a company like SIRI, who besides their
> enormous debt, is what I would call a viable, healthy company, pays
> it's bills, etc..). Though, a viable, totally healthy company NEEDS
> to show sound, fiscal responsibility across the board (including
> the debt it takes on and HOW it pays its bills) at some point IMO.
> And I hope that point is coming for Mel and company after this ordeal.
> But in general, a dilution as may be upcoming, is NOT a BK by any
> sense of the word. It only has a similarity here in that both would
> wipe out existing debt. The only other similarity by comparison is
> where the Street has currently priced this stock. But by most other
> definitions, BK and dilution by equity are very different animals.
>
>
> But to my original point to you, I do think in a better market, with
> their debt gone and continued performance on their guided metrics,
> post reverse, the company has a much better chance at rising legitimately
> than in this current mess. And as you say. There are few options
> for common holders at this stage and the new future looks brighter
> than the current or past to me.
Good luck with the car and the great product is what got most of here to begin with. There is always room for improvement on the hardware for portability, but that's probably in the making .... For my part, you and anyone else are always welcome to step into the conversation. Again enjoy....
No worries. Your comments are welcome and cool you were able to get a lease!
Thanks for the rundown and we're finally almost there. I'm looking forward to the 18th so we can finally start looking at some changes of the 'whatever' kind. We've been drifting in the desert now far too long... but at least we've had canteens of water...so we're still of sound mind and not halucinating. But one way or the other, culmination to something is not far off and I for one can't wait to see what it is...
Killer...
We've been at this a while and I agree, never have I done this much due diligence either. But in one way it's been a good Trade School exercise and should make those of us who have used it as such better traders and investors. All of this has also enabled me to be more observant than ever and pick up a few new trend tells that I never used before and look forward to exercising in the future. Why do I have the feeling that though a bit protracted, this investment still has some payoff in it's future. With the market starting to get better in general, many of our trades should eventually start having more evaluable returns. We've just been through a war like hasn't been seen, some say, for quite some time. It sure has helped to have you and the dog as part of this Charlie Company..sound off, 3, 4...
As you say, still the battle rages and our mission remains unfinished...we will see this through to victory...
Like this not too bad looking blonde aussie chick said on CNBC today...when you've got Lehmans, you just make Lehmanade. That's what we're trying to do...
Have a good weekend all...
Bill R.
As profit and loss statements show a balance sheet that APPEARS to be in the red, it's the it's the billion dollar debt load that throws the numbers out of whack. For the prospect of future lenders to restructure SiriusXM, underwriters will take a hard look at SiriusXM's ability to repay loans. It's like a homeloan: Mortgage bankers look at the future earnings of potential borrowers (well, at least they're supposed to based on this current housing crisis where underwriters did not do their job).
Anyways, here again is Scotty's Slant: With SiriusXM's healthy monthly revenue stream, and management team building a powerhouse of a business model, their current and future earnings potential should far outweigh the billion dollar debt issue....
And by the way, there is one more thing: My opinion might be just as constipated as that "Up the Tailpipe Again" person. I think he forgot to read the "tailpipe" instruction manual where it says: "Caution, to avoid serious intestional blockage, cut crimped end off tailpipe before inserting up rectal orifice....
Scot's Slant
thanks for all the wonderful knowledge and insight guys, and may we all share a cyber bottle of champaign some day
Just a question on your position at this point in time and I am being completely serious. Do you see any level of dilution or any need for a Reverse Split for this company in the future? Given its current realities and not its history.
Now as for the RS, I dont even think they know right know what it may need to be, except for what they believe would be the maximum that they would need to do, if at all. What would you want them to do, ask for a 1 for 10 split, then have to come back and say sorry we were wrong the first time we now need a 1 for 40 split. That just is not what is going to happen. Lets not forget that they are asking for this possibility all the way out to Dec of next year. Dayworker, do you even know exactly how much you will spend on Chrismas next year? Are you getting it yet? The best you can do is estimate depending on the situation that you are in at that time.
Now I dont know how much clearer I can be. Mel said the delution would be done for on going cost like they have done for the last 4 years and maybe for if needed, refinancing of debt. That right now they just dont really have any shares avalible to do any of it. As for the when or how much the same gos for that as the RS they most likely dont know what kind of financing they can get. Now when I say that, I will give you a example, so you can understand: Mel may have all the financing he needs except it is at 20 something %, How good is that percentage rate? it sucks, right. I would rather it be taken out using delution, I am sure that Mel would say the same thing. Now lets say its not all at 20 % but some is at 7%, some is at 10%, some is at 14%, and some is at 20%. Then there is a good chance that there is a combination of deals, for instance he can get some at 7% but also needs to take some at 20% to get that deal. Then there is the different kinds and different dates which may have combinations in it. I think you get the point it maybe impossible to know exactly the amount that needs to be taken out using delution. I dont think it is any quintessence that the time frame they have given is the same time frame that the financing has to be done in. First debt issue is Feb. the last one is Dec. The meeting is Dec 18th and the time frame that is being asked for it to be eligible is Dec. What that does is it gives them every way they may need to take out the debt without being hamstrung into any specific way. For instance, Mel may have a deal right now that would take all the debt out but the interest rate is not great or even good it is barely exceptible, or he also has a deal that takes some of the 2009 debt out and is better and the best he can get in these times but if he takes it then the other deal is off the table and he then has to get the other debt done another way, in another deal. I think anyone who reads this can get the point. That there is alot going on, it involves alot of money and time (2 months to a year). things are not black and white, right and wrong. There are gray areas and if you think you are going to get specifics your nuts. If you are a exceptional CEO you would be planning for every possibility. That is exactly the kind of man Mel is. If you remember in that interview on MSNBC he said that " I have 2 or 3 plans for the plan that may fail or has not even been put into motion yet." So in the end Mel has given you everything you need to know which is what he may need for the worse case, to make sure he does not get stuck with the worst financing.
When I said this:
I want to know where they said that as well....... but I don't hold 163888 accountable for the location of that information. As a matter of fact can I get that for every company that I invest in??? LOL
My point to dayworker in response to his post is that no one has ever given the kind of exact guidance and numbers that he was asking you for. That is just not done. That's why I said I wanted it for all companies that I invest in.... If you read his next post he got my sarcasm .......
- - - - - - - - - - - - - - - - - - -Rodney King
LOL
They wont need a tool booth .. Technology today could read a transponder in yout car and gather all the info it needs. NUmber of mlles above spped limit (Local Ca Ching), Number of City miles Driven(Local Ca Ching), Number of Hiway miles driven (Federal and State Double Ca Ching). Toll booths are to expensive. The Government will just make you bring in your vehicle under the guise of emissions testing.
It's been too long since we had a conspirency topic on these blogs.
LOL
gurgle gurgle blurp blurp...
Ah yes...resting comfortably on the bottom with the occasional air bubble glurping toward the surface...something's 'bout to break.
Very insightful scenarios regarding the debt and how Mel may be taking it out. At least he is giving himself options, which is a sign he is working very diligently on the debt issue. When he pulls this off many will change their tune on his management abilities.
I do have a question for you on this. Is it possible that dilution and reverse split can be avoided even after they are approved at the Dec 18 meeting? I would be interested in your opinion on this.
Long Sirius
As for the delution I do think some is going to be done they have been doing it for some time, just by not that much. It is no secret that many contracts they have include shares as part of the pay package. Now as for the delution to refinance some or all the debt that is possible that they wont have to, I just would not bet on it. I believe there is at least some (maybe all) that will need to be done. I do think when the 4th quarter FCF comes in many will be surprised at how large it is. I am expecting that number to be at least 200 million, I also think that is being conservative. There is one good thing about the OEMs not delivering, it means that each one they dont, is one that SIRIXM does not have to pay a 100 dollar subsidy on. They also have been saving on advertising. Not to mention all the savings from the merger will start to show them selves alot more in the 4th quarter. Those will all add to the 4th quarter FCF and something I did not add in whern considering the 200 million number. I get that by estrapulating the 4th quarters FCF from the last 3 years and seeing the increase from year to year. For example 2005 they were both at about even FCF. In 2006 SIRI and XMSR both had just over 30 million and just under 30 million. in 2007 SIRI went from just over 30 million to just over 80 million. While XMSR had none they also had just paid off the last satellite (CAPEX) they had at a cost of about 85 mllion. (In the conference call, they gave that as the main reason for not have a good FCF number and said that would improve greatly because they will not have to deal with that cost for a long time.) Now while there was only about hhalf as many subscribers add from 2007 to 2008, that still means that if you just go by the sub number you cut the 2006 to 2007 jump in FCF positive in half, that is still over 25 million more for the SIRI side and just under 25 million for the XMSR side of business. Add that to the 82 million SIRI had in FCF you get 107 million. By the way, the rest of it has to do with how much cost cutting Mel did in 2008 compared to 2007, while up to the merger the difference was a little less for 2008 then it was for 2007. I think that all changed after the merger happened, and those cuts will be way more then 2007. This is just my opinion, you can take it or leave it. Because I actually believe SIRIXM is in the best position then they have ever been in. The financing is the only thing left to take care of and I think Mel will take care of it.
Thanks for the professional post to my question. Facts are stubborn things, and you have outlined many facts which support a positive direction for Sirius going forward. I agree with your perspective and appreciate your in depth accounting of SiriusXM regarding the dilution and reverse split. It just may not be as bad as some are predicting. Thanks again!
Long Sirius
Thanks for the professional post to my question. Facts are stubborn things, and you have outlined many facts which support a positive direction for Sirius going forward. I agree with your perspective and appreciate your in depth accounting of SiriusXM regarding the dilution and reverse split. It just may not be as bad as some are predicting. Thanks again!
Long Sirius