Sirius XM: Looking Ahead to Fourth Quarter Results 161 comments
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I find it ironic that a Wall Street Analyst is the only job in the world in which, when they are wrong in their analysis, puts the company in a bad light rather than themselves. Now that most Wall Street Analysts have dropped coverage of Sirius XM (SIRI) for the time being, I thought I’d take a shot at doing some projecting myself. I’m going to try my hand at a simplified version that will not require a degree in accounting or economics to understand.
The OEM numbers should be the easiest to estimate. New car sales for Q4 2008 totaled 2,481,069 units, compared to 3,800,000 in 2007. We can safely assume a modest 50% installation rate which tells us that 1,240,534 cars were sold in the quarter equipped with Satellite Radio. Although most believe the subscriber conversion rate on these units to be approximately 50%, the general economy should weaken this number a bit. Last quarter came in at 47%. My best estimate is that 46% signed up for the service in the latest completed quarter which would bring OEM subs in at a conservative 570,646 new subscribers.
130,037 subscribers will have been lost if churn remains at a historical constant of 1.7%. This would bring the total end of year subscribers to 19,361,520. If we add retail and multiple subscription packages such as the highly cross-promoted “Best Of” packages, the company should easily reach its year end goal of 19,500,000 subscribers.
Having made that bold assumption, subscriber revenue should come in at over 600 million dollars, with advertising and equipment revenue bringing total revenue even higher.
Of course, the top line numbers have always been good. The problem facing Satellite Radio has always been controlling its costs. Mel Karmazin has done a great job at Sirius in reducing costs which nearly brought the company to a break even point on its own. It is impossible to estimate the savings that may or may not have been realized in Q4 due to a lack of history since the merger. I firmly expect that the company has greatly reduced its costs for the quarter, yet actions such as these always carry a cost associated with them which may result in a near term offset of any gains that were realized.
Another question remains in whether there will be additional goodwill impairment charges reported. The company did take a charge in Q3, so there is no requirement for them to do so again in Q4.
All of these factor into whether Sirius XM will meet, beat, or miss the -.06 to -.08 range for the quarter, with the consensus being -.07. For each of the last 2 years, Sirius had surprised to the upside in Q4 by .02. With this in mind, I am projecting another upside surprise of -.05, as earnings are expected to be reported soon.
Disclosure: Author is long Sirius XM
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That said, I'm kind of pulling for that extension so I can add more shares in the .11's before an actual CC.
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As you know, I agree with your assessment on caution. And it can never hurt. This week though something seemed different to me. The daytrade dried up and yet the SP held steadfast..now with what I perceive as a different action today and then the pop EOD. Certainly could be a short fund giving up all at once but my take is it was a Fund buying in. Aas in that last time in Jan or Dec when a Fund (or Funds) dumped like 50M shares just before the close. As we know Funds are required to wait until very EOD to inject large trading position action. So I look at this more as a new buy-in than a short cover. Then the question is, if true, is it related to little birdies or just new speculation. As we know there's a new question around every bend! As you guys say, we should hear something on Monday regarding earnings. This week has done something to my thinking though and I've become much more optimistic that the debt news could very well be tied in with the Q/K. If the numbers are good to flat and we get resolve of debt news and Malone/JPM deals, could wind up being a big event. Is that Mel's plan? Could it be that something may actually be done for the shareholders for once? I do know this. At some point soon, this thing will unlock to some degree and change for good going forward short-term. We've now seen 2 nice runs and two pull backs because of incomplete data. I think we're starting to get too close to not be there for the ride. I think you guys have more shares than my 50K. So you have more options doing a 1/3 and still be ready for anything. I never bought in at the .06 like you and killer, et al. I would have had my porfolio not sucked at the time!! I have some new capital now and have been waiting for a turn down this week or a day trade, but neither materialized. If we turn down as you think, I will load up then go from there. Your strategy has validity. Monday should be yet another exciting day in "As the Sirius Turns"..LOL
SOMETHING BIG IS COMING
Can't wait to see what the "BIG" thing will be.
On Feb 27 05:30 PM cygnus wrote:
> Yes, I suppose so.. one of those things where you could read it a
> couple ways... For those not wanting to follow the link (once you
> cut and paste) It says:
>
> Next Week Find Out Why XM Makes More Sense Than Ever
>
> One Week Sales Event
>
> 3 Deals. 3 Ways to Listen.
>
> Be interesting to see what the deals are anyway.
2. Just because my opinions differ from yours does not mean my head is in my "arse".
3. I didn't vote for McCain because he's a moron that graduated bottom of his class and his running mate was proof of what kind of decisions he would have made in office.
4. There's more to life than the market.
5. Being that I own a chain of smoke shops and medicinal marijuana clubs in California, I'm thrilled with Obama's economic plan!
6. Any time you start a post that refers to how stupid the American people are (I'm paraphrasing) you should expect some blow back. You are no better than anyone else.
On Feb 27 05:26 PM 163888 wrote:
> Wolf child, You are perfect example of what I was talking about.
> Do you have any idea of how those jets are set up. You really think
> they are just sitting on their arses having a drink. The optimum
> word in private jet is "PRIVATE" so business can be taken care of.
> These men are in charge of the entire United State auto industry,
> you do realize how important that is right (and once again far more
> important then being able to put a basket ball through a hole). Who
> pays for it is the stock holders I for one dont want my CEO traveling
> by car for 8 hours (when I am paying him over 5,000 dollars a hour
> with salery and bonuses based on a 70 hour work week) when he could
> be doing the work he supposed to be doing on a PRIVATE JET that is
> set up for doing the business at hand. Get your head out of your
> arse it is not about the people it takes to run a private jet it
> is about dollar cost analyses, it is about simple math. If you are
> wondering why I am so mad it is because it is people like you that
> got hood winked by the MSM to vote for Obama. By the way hows that
> Obama economy working out for you. It is people like you who could
> not put 2 and 2 together to realize that every time when McCain started
> to come back in the polls the market went up and when he went down
> so went the market. You know the market trades on the future right,
> so was it that hard to figure out what was going to happen if Obama
> was elected.
Hear ya on the Obama topic. He's bitch-slapping Wall Street (who are paying him back by hurting us, the people he thinks he's trying to help), and pretending to be Abraham Lincoln (with whom he's obsessed and thinks he is reincarnated as). This guy has no sense of timing and certainly has no clue what vetting means or how to hire people. He's juust another wealthy scary dude who has tons of personal cash and is willing to play with this economy and our investments. Why should he care about our personal wealth destruction when he heads off to Hawaii to his beachhouse (and where he grew up)? Or when he takes his kids to their private school? Or has his TS give a horrible speech about nothing. He also thinks he's Robin Hood.. I'm tired of him already...We have just another wealthy cat who is now like a kid in a candy store getting drunk hiiting on his power keg..just another bait and switch from the campaign trail. These guys will and do say anything to get that power. Once they get it, look out man..as we can now see..
You guys weren't contrarian, you were prudent. Nothing wrong with being prudent..well done. AH seems to be holding up. I will see what Pre brings on Monday...I might join ya with a percentage...
Your top 150 comment listing obviously didnt come from your Sirius comments. I took nothing usefull from your comments, and believe your completely wrong on every point you have made. I know what your point was, and their talent acquired is for "the masses". Liking Howard is not cult like, either is MLB or Oprah. I dont know anyone(woman at least) who doesnt like Oprah. Adding more classical music channels would drive AWAY subs, not add to them. As time goes, SATRD will be a stardand. We wont even think about it, we will just turn it on, and enjoy it. Terrestrial radio will survive, but it will never be anywhere near as profitable as it was on its height. 23 m subs? are you including canada I take it? Is that even the same company? Didnt think they were. Just paid for the bandwidth. Correct me if Im wrong. 23% of revenue? Seems a bit high.
On Feb 27 06:39 PM sl62 wrote:
> 163888...
>
> Hear ya on the Obama topic. He's bitch-slapping Wall Street (who
> are paying him back by hurting us, the people he thinks he's trying
> to help), and pretending to be Abraham Lincoln (with whom he's obsessed
> and thinks he is reincarnated as). This guy has no sense of timing
> and certainly has no clue what vetting means or how to hire people.
> He's juust another wealthy scary dude who has tons of personal cash
> and is willing to play with this economy and our investments. Why
> should he care about our personal wealth destruction when he heads
> off to Hawaii to his beachhouse (and where he grew up)? Or when he
> takes his kids to their private school? Or has his TS give a horrible
> speech about nothing. He also thinks he's Robin Hood.. I'm tired
> of him already...We have just another wealthy cat who is now like
> a kid in a candy store getting drunk hiiting on his power keg..just
> another bait and switch from the campaign trail. These guys will
> and do say anything to get that power. Once they get it, look out
> man..as we can now see..
On Feb 27 06:37 PM 163888 wrote:
> cos1000, I would not feel to bad I got more shares of this pig at
> .08, .11, .13, .15, (I dont know why I dont listen to myself when
> I said no more) and did not sell when I saw in AH it go to .23 so
> greed works both ways. Knowing my luck with this pig it will go back
> down again.
First, you say you own a business yet you never broken your electric bill (gas, rent/mortgage, yearly maintence) down to a daily cost basis. So yes there is a hourly cost that the CEOs of the Big 3 can be equated to, you MORON.
Second, the fact that you disagree with me on this issue means you have your head up your arse.
Third, the fact you choice the person that would through his own grandmother under the bus just to get ahead, over a person that says no I will do the right thing and wait my turn in line to go home (all the while knowing it ment more torture), just gos to show your kind of character to. Also dont even get into Palin when you vote for a man that said we had 57 states. (there were many others but you never heard them because as I said before you got hood winked by the MSM) Also need I remind you he had less experince then she did. She had more executive experence then all three of them combined. You do know the last time there was a senator that was elected president, thats right JFK. Now lets get into Obamas choice, I am sure you never heard Bidin say that when FDR got on TV and talked about the depression in 1929. Lets break that dumb arse comment down. First there was no TV in 1929. Second FDR was not president in 1929 it was Hoover. Also once again that was just one of a very, very, very many goofs that man made. Once again you never heard of any of them because you were duped by the MSM, just like most of the dumb arsed public.
Forth, while the market and the economy are two seperate things they are directly connected. Only a dumb arse would not know that.
Fifth, Lets see how you like you Obamas economy in 2 years when we are still in the crapper because like most of the general public you change your mind if something doesn't happen soon after.
Finally, how did I know you voted for Obama (killerkaul by now knows). What is it called commonsense and logic.
wolf child - I swear there is so much wrong with your 6:35 post I would have to write a novel to rebuke that drivel. Since my New Years resolution was to quit wasting time on idiots, though, I will not take the time. I am generally a really nice guy on these boards and I do not go after people...but you clearly are a friggin' moron and that pile of slop ticked me off. You can't fix stupid (and I mean that in the most positive way possible). Your parents clearly did not beat you enough as a kid.
On Feb 27 07:20 PM 163888 wrote:
> Wolf Child, I have never had a problem with blow back, ask anyone
> thats been here a while. I tell it like it is and if you are a dumb
> arse you are a dumb arse.
>
> First, you say you own a business yet you never broken your electric
> bill (gas, rent/mortgage, yearly maintence) down to a daily cost
> basis. So yes there is a hourly cost that the CEOs of the Big 3 can
> be equated to, you MORON.
>
> Second, the fact that you disagree with me on this issue means you
> have your head up your arse.
>
> Third, the fact you choice the person that would through his own
> grandmother under the bus just to get ahead, over a person that says
> no I will do the right thing and wait my turn in line to go home
> (all the while knowing it ment more torture), just gos to show your
> kind of character to. Also dont even get into Palin when you vote
> for a man that said we had 57 states. (there were many others but
> you never heard them because as I said before you got hood winked
> by the MSM) Also need I remind you he had less experince then she
> did. She had more executive experence then all three of them combined.
> You do know the last time there was a senator that was elected president,
> thats right JFK. Now lets get into Obamas choice, I am sure you never
> heard Bidin say that when FDR got on TV and talked about the depression
> in 1929. Lets break that dumb arse comment down. First there was
> no TV in 1929. Second FDR was not president in 1929 it was Hoover.
> Also once again that was just one of a very, very, very many goofs
> that man made. Once again you never heard of any of them because
> you were duped by the MSM, just like most of the dumb arsed public.
>
>
>
> Forth, while the market and the economy are two seperate things they
> are directly connected. Only a dumb arse would not know that. <br/>
>
>
> Fifth, Lets see how you like you Obamas economy in 2 years when we
> are still in the crapper because like most of the general public
> you change your mind if something doesn't happen soon after.
>
> Finally, how did I know you voted for Obama (killerkaul by now knows).
> What is it called commonsense and logic.
Funny enough, my break-even point for SIRI is getting lower every single day because of the tanking Canadian dollar. I'm down to like .26 to break even now!
Thank you for your astute comments. They are well taken.
As I am a current SIRI subscriber and a shareholder (long), obviously we are on the same side. I must admit I could have been a bit tardy with those numbers you quoted, as you could see it was written at 5 P.M. EST just when I was in a hurry to head home to beating that traffic.
I will go back to revisit those numbers and if I would find any major discrepancies I would come back to amend them.
Again, thank you and I enjoyed our exchanges.
Teutonic
On Feb 27 05:22 PM cos1000 wrote:
> Teutonic Knight,
>
> reading from "reliable sources" is just more babble to further an
> opinion.... give us the facts... My other observation is that you
> like the numbers 2 and 3. as in 23%, 23M subscribers, 320M population
> in No. America and 3 Classical Music channels.... You also like
> the number 8, but not as much....
>
> You also think that Sirius presently serves a Cult Like subscriber
> base, that inhibits the SP from Rocketing and until management gets
> rid of those subscribers and plays more than 3 Classical music channels,
> it is a dead end.....