Miller Tabak Neutral on Sirius XM 198 comments
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David Joyce of Miller Tabak issued a report toyesterday on Sirius XM Radio (SIRI). Citing the debt issue, the analyst lowered his price target from $1.00 to $.50 in the short term, and went from a long term $3.00 to $2.00. Considering the current prices of Sirius XM stock, getting to these levels would be quite an accomplishment. Joyce maintained a neutral rating on the equity. Sirius XM saw a boost in share price amid speculation that EchoStar was acquiring large portions of Sirius XM’s debt.
Joyce is expecting Q4 earnings to be announced in the next two to three weeks, and is still estimating net subscriber additions of 460,000 with retail bringing in 253,000 and OEM 201,000. He remains cautious due to the economic environment though. This would bring the subscriber count to finish the year to about 19.38 million.
David expects 4Q08 revenue of $614 million and a $(93) million Loss from Operations (OCF). For Q4 they are expecting a Net Loss of $(239) million or $(0.08)/share, and positive Free Cash Flow of +$66 million. The $66 million of expected FCF + $360 million of cash at the end of 3Q08 would give the company $420 million of potential cash. In their estimation, this cash could help deal with the $175 million of 2.5% convertible debt due 2/17/09.
Showing some caution, Joyce brings up the issues of dilution, change of control, or bankruptcy-like restructuring, or something in between, which could play out during the course of coming months. On the Echostar news the analyst notes that the accumulation of SIRI debt may pave the way for EchoStar to have a say in how the company evolves, operationally and financially, from here. He also noted, “SIRI satellites already provide a few video channels to certain automotive models, so it would not be too far of a stretch to consider some form of satellite communications combination here.”
Position: Long Sirius XM Radio
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Thanks for getting all that out of your head and onto the board. Very nice logical approach to an event announced by the WSJ that appears to based more on speculation than fact. Your saying that if this was meant to be a good thing, why not announce it with a bit of pomp and circumstance is a great point. I do think that this was meant to be a negative event, published by the MSM to further manipulate the SP down for the purpose of shares for debt conversions of the remaining Feb 2009, debt. Just my opinion.
The remaining bonds for Feb are selling now at a premium, and the SP is back to where it was, so holders can get the maximum shares for the bonds they hold. Your point about Weinkes ending coverage is a good one. GS has always been privy to news before anyone else on this company, maybe they are the source of the ES quietly trying to buy Sirius' debt, after they themselves were approached. The 13F-HR reports soon to be filed will be able, in hind sight, tell us more of what probably happened. Unfortunately not soon enough for us to guide our investment decisions.
Buying up some of the Bonds for Feb 09, around $52M outside of GS per mffais 11-14-08 report, another $100M of Bank Debt as you suggest from UBS AG (maybe), and as s162 suggests, buying more Dec 09 XM debt that was selling at a deep discount through Q4, adding to pre merger positions, all could be part of the formula if indeed ES is trying to take control or make some solid investments. I still don't clearly see how taking Sirius XM into BK, given ES' current overall financial condition, is a smart move for Ergen. He will also be taking his own investments into the BK court for a Judge to decide what happens next. That doesn't seem like the best way to play a Poker hand.........
asm mentioned this...Caught this article this morning by my old buddy Doug McIntyre over at WS24/7. A total loser lol. He was forced to abandon his SIRI won't make it out of '08 scenario so he's moved on. But he may have a point in reminding us all of this.
>>EchoStar (DISH) play, a move into mobile video
Posted Feb 8th 2009 6:46AM by Douglas McIntyre
Sirius XM (NASDAQ: SIRI) was showing early versions of mobile video for cars five years ago at the Consumer Electronics show. With it heavy debt load and questions about how large the market might be, the satellite radio company never took the step of offering it as a product.
The promise of mobile video may be behind that willingness of EchoStar (NASDAQ:DISH) to buy tens of million if not hundreds of millions of dollars of Sirius debt. The move could get EchoStar control of the satellite radio company. According to Reuters, "EchoStar chief Charlie Ergen's surprising interest in Sirius XM Radio Inc belies his ambition to liberate his satellite television service from the living room into cars and mobile devices."
EchoStar is taking a very big risk. Pushing video over the Sirius infrastructure may not work. The bandwidth from the satellite to the cars is very limited, closer to dial-up speeds than broadband, Sirius may not be able to "compress" the video files enough to get them though its system. In other words, the technology may not exist to put video on a system which was designed for audio transmission.
Other than the fact that it may not work, EchoStar's potential plans are brilliant.<<
No doubt this is one end game. He doesn't want the company (as the WSJ itself said, who would want a company lock/stock that has never made a profit?), he just wants access to the 20M subs--because his chances of growing his subs substantially anymore is "slim is already out of town". And he knows his goose is cooked in the next 4 quarters if not for the duration, and the Street is about to take him out back. Unless he can expand his beam to someone elses sub base/config (into cars). The other end game is what does he have to lose by buying up SOME debt here? And on the cheap? He knows the timeframe just like anyone else. The theory that most MSM have been angling is Ergen wants to force the company into BK--which we know is impossible because Ergen's just not that stupid. He knows he can't do it. What he's done (I still believe starting with XM last summer when they had one foot in the grave before Mel saved them), is use some of the 1B in cash he "gave himself" from his other company Dish, to start buying their debt ridiculously cheap and wait for XM BK. Then Mel shocks the world by closing an impossible deal, so maybe he buys a little more of the 400M Dec. thinking like all other MSM that SIRI combined would cave before '08 was over and file--which never happens. MAYBE he also buys out foreign bank UBS (no way JPM). I also disblieve he has any Feb because GS isn't stupid enough to sell those bonds (that they've been holding since 2004). How stupid would that be? And we know GS is an ally to Mel. They wouldn't sell him out like that. Ergen's taken a calculated risk (which as a card counter is what he does) to see how it pans out. At very least it gets him to the table with SIRI to try to leverage a deal for access to SIRI's 20M subs. At very least, he's bought bonds on the cheap and if a BK (his thinking), he's in line in court for next to free chunks. At most, he owns the debt of a company that saves itself--he either gets his money back plus a profit on a paid in full (SIRI refi with another source), or he keeps/rolls over the debt and keeps collecting his 10% (those 400M XM bonds jacked from 2% up to 10% at the Merger), biding his time while he keeps negotiating with Mel to get what he eventually wants (access to those subs). Either scenario is a win-win for Ergen with very little downside, if any at all (SIRI BK's he wins/SIRI pays him off he wins/He leverages access to subs, he wins).
We're not the only ones racking our brains trying to figure out why someone would buy SIRI's debt (back door) and not just make a play for the company (front door). When you know you will not the only creditor, thinking you are going to force SIRI into BK and get exactly what you are after of the company's parts is delusional. So that's out. And if he was that desparate, he'd just make a play for the company front door, then dismantle it and take what he was after (the subs). It's clearer everyday that these are not the answer. What is the answer IMHO, is he is hedging to see what can happen with him having SOME debt and a negotiating chip. All made possible because of the 1B in cash he took out of Dish.
I just read your post and I couldn't agree more...
jswede, your right your stupidity doesn't cease to amaze does it. that is .15 cents on the dollar. I could have made almost that from the common stock just today if I sold. By having control of 175 million at the most of Feb debt will give you nothing, in bankruptcy. By the way that is what you will be stuck with if you dont have the funds to pay the rest of it. Which once again Echostar does not. They have a total of 350 million of COH and just over a billion in allowable assets not enough to get the company. DHAAAAAAA.
Feb 05 10:21 AM |Report abuse| Link | Reply +1-2
That of course was when the WSJ was reporting Echo star was buying Feb. debt.
Thanks for the mention. I feel like I'm not so "out " there with my comments now. Apparently I am not as feeble minded as I thought!
Sorry once again just could not help myself. Besides I know killerkaul is laughing his arse off at these.
Sorry once again just could not help myself. Besides I know killerkaul is laughing his arse off at these.
what do you mean........what were we talking about again? I have to go eat some jello.
Long and Bullish I remain!
Lets hope it is a lesson in patience ie.....good things come to those who wait! Understandable that alot of folks are very skeptical......alot of folks only dabble and have no business investing in newer stocks. The stomach needs to learn not to growl and knot up at every twist and turn.....this takes years of lessons learned gained through experience. To quote a former boss.....don't get involved investing and trading in newer and emerging companies if you have a piker mentality and no stomach for bad news.
As usual, you were all over it...
You guys...next couple weeks should get us back up to speed and "out of the doghouse". Time to get back in the "main house". The dog has much more room to run around there. Keep an eye on 'em Killer!
I'm your huckleberry. Been around the block more than once, but I like to keep a low profile and listen now....there is still so much to learn
You do know that as you tried to say the 163888 isn't mean, that Freud got involved and had you identify him with the signal of the Devil, 666. LOL.
asm6
These are not the times to be silent.... low profile aside, your opinion is an important part of figuring this nightmare out.... Stay strong and long my friend......
Absolutely will inject my 2 cents into the conversation when I need to or if I have some information, no fear there, still Long, Strong, and Bullish like you wouldn't believe. Only wish I had the finances to get involved in every opp I see!
Interesting little article about CE making an unsolicited offer for SIRI late last year.....yet we just hear about it now!
Let me guess.... it doesn't fit your self-educated calculations. Hard to explain how this love-stock could treat you so bad, isn't it? Just can't imagine Mel & Co. make you look like complete hot-air buffoons. Shocking. And all the cheerleaders who rooted you on..... how could your limited wisdom let them down like that? Kind of hard to imagine which is the bigger fool now. Is it the leader..... or the follower?
Perhaps you all need a group hug..... to tell each other every thing is going to be all right and Mel is going to coming riding in and save you all from humiliation. Good luck with that.