Sirius Needs to Provide the Goods, Now 18 comments
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With the debt issue behind them for 2009, it is time for Sirius XM (SIRI) to begin to execute on the business plan and show that their efforts make this company not only viable, but valuable. Yes, OEM sales are still painfully low, but management needs to demonstrate that merger synergies and their business model can weather the storm. Investors need to see that costs are improving, that the brand is growing, and that satellite radio will prosper even when the auto industry is in a slump.
People are tired of waiting for all of the stars to align for this equity to return to the days of 2004 and 2005. People are tired of reliance on outside parties such as GM and Ford (F) having such a tremendous impact to the downside. In this economy, people are looking for an equity that can stand on its own feet. With everyone suffering heavy losses in their portfolios, people are tentative when it comes to risk, and like it or not, there is risk in Sirius XM Radio. Until the company can outline a plan, and demonstrate that they are hitting each goal, the perception of risk will not minimize.
Satellite radio can be a cash cow, but they have yet to prove it. This is where the tenor of the company needs to come into sharp focus. This is why clear cut goals need to be established and reached for both short and long term. Investors love to hear about next year, but they are nervous now, and need some milestones for next quarter. Conference calls need to be as soon as possible, not at the last minute. If auto companies can put out numbers within a month of the quarter's close, satellite radio should as well.
With this equity, everything seems to be an uncertainty. The company has the ability to remove the guesswork by simply giving the street something to hang their hat on. Q1 ends on March 31st, then have the call by April 30th, and continue that process. The longer the street has to guess, the more risk the street associates with the equity.
There is one satellite radio company. Establish the goals, march in time, and give the investors something to know they can count on. Even if the picture is not pretty, goals and objectives can be established.
Position - Long Sirius XM Radio
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Surely Mel knows the current year performance and needs to communicate that to the SHs, the business cimmunity and the media. Maybe then the negative drumbeat will subside and this company can fulfill its upside potential and its ultimate successful destiny.
Long SiriusXM!
One thing that could really help is a sign that SIRI will be able to cut their way closer to profitability. If they can do this, then the street might assume decent growth returning sometime in the next year. I mean, people have to drive cars, and the crazy auto numbers are just simply unsustainable.
Another thing. I saw for the first time an XM website advertising a free trial for a 7.99/month internet feed. In addition to cutting costs, another potential catalyst is the development of a second even quasi-decent new sub aka revenue stream. With the auto numbers, SIRI clearly needs to find alternative new sub streams.
Fortunately, they now have some time to weather the larger economic storm. I have a feeling they won't have anything to super to report before the 2nd quarter, although I'd love to be proven wrong.
For a song, Olivia Newton John had a hit in the 1980s (or was it the 70s??): Let’s Get Physical. It included the line “…let’s get physical, let’s get serious…” Olivia could do an update with more of a Sirius XM slant. Just a thought.
Another new Sirius product idea comes from Comcast: On Demand. You can watch 1000s of movies at any time you want for free. They also have newer movies you can watch any time for a small fee ($3.99 per). The idea: Have a Sirius XM service that has a programmed list of 1000s of songs that users can access at any time from the Internet or cell phone, or whatever listening devise they have (devise probably needs to be developed to allow user access to the servie). The service can be included as an addition to their monthy fee; or, added when price increases occur; or some other method. Again, just thinking out loud.
People already have a service whereby they access thousands of songs for free. It's not on the internet though, it IS the internet.
Your article doesn't make sense.
Sirus/XM as a whole still owes roughly 2.9 out of the 3.4 billion in debt. Just because a company steps up to the plate to extend some outstanding debt leverage, doesn't change anything. There is still debt, common shares are still diluted at 40% of liberty Medias ownership. Sirius/xm still owes liberty at 15% interest, nothing really changed accept that sirius/xm payed roughly $500 million of the $1 billion owed for fiscal 2009.
Acquisition cost for OEM car sales haven't changed at 43%, and churn is expected to rise which is one reason sirius/xm extended the date of q4 report, or so is speculated.
Some people speculate churn high in 4th quarter because of the channel line up and consolidated channel changes, as well as horrible customer service.
Sirus/xm has made changes to become more efficient as far back as middle 2008. in january 2009 siriius/xm added the $6.99 deal to people for a la carte, and the best of sirus xm for almost $20, and a 2 dollar fee added to family plan subscribers, and people pay for internet service now. Sirus XM has done everything internally to stay competitive and as cheap as possible. Unfortunately a recession changes the environment in which sirius needs to acquire more subs.
As long as default (in the next week) is not imminent, the debt does not exist as far as these discussions go.
"Retiring" debt, when in actuality it's a restructuring for 3-4x the previous interest rate, is a good thing around here. The 16% yield paid on the $780mil borrowed in July was not ever even discussed here until months later, as Feb 09 approached - and even then, hardly at all. (I brought it up several times with no responses.)
You'd be amazed at how many "2009 debt is no problem" comments were made last fall -- and those same people still believe that (even if they did not for a week or 2 last month).
I was in no way truing to imply that the debt is gone. What I am saying is that the business at hand is no longer the debt. The business at hand is growing and gaining the confidence of the street.
The debt does matter. A company is only as powerful as the cash that it has on hand. A company can not adapt well to it's economic environment if it doesn't have the cash available. Although a company can always downsize to adapt to it's environment, and do well if as a company has the cash on hand to succeed.
In the case of sirius/xm not having any credit (for loans), and needing the cash on hand as a cushion to pay debt, doesn't leave the leverage the company needs to handle advertising that would move consumers in the direction of acquiring receivers on the retail level.
I myself have not seen advertising on the a la carte programming offer. How do people even know that a la carte exist, unless I walk into a Best Buy to discuss with a CSR representative. All sirius/xm needs is a better advertising vehicle to penetrate a part of the consumer market that would increase retail sales and decrease acquisition cost. Unfortunately this cost more and is at a greater risk than what it takes for sirius/xm to acquire subs on the retail level, just because there is a debt, and the money isn't there.
On Mar 09 07:33 PM Tyler Savery wrote:
> Yes, the debt still exists, and it is not inexpensive. However,
> the biggest issue with the debt was the timing that it was all due.
> If the company can bring together their synergies, execute on a business
> model that works, and grow the subscriber base, the debt becomes
> more workable.
>
> I was in no way truing to imply that the debt is gone. What I am
> saying is that the business at hand is no longer the debt. The business
> at hand is growing and gaining the confidence of the street.
I'm not sure if you're a subscriber or not but the 'synergizing' they did in the recent channel merger sealed the deal for my subscription (a 3year subscriber) with me hitting the cancel button. I gave them two months (and plenty of calls/emails) to clean up the mess they made with no such luck. For a company to abruptly cancel my favorite channels (and greatly change content) with no warning, no surveys and no letters in the mail was the one of the biggest goofs I’ve ever seen in a publicly traded company and I think really speaks volumes about where this company is headed. My phone calls were met with the same response each call “here’s more free subscription time”. Sure, so SiriusXM can disguise the fact that the channel merger was a huge blunder to the real world. They want to keep me as a ‘subscriber’ so you didn’t see a huge drop in subscriber numbers. It seemed to work as they kept telling me they were ‘reversing some changes’ each I called in so I let them leave my subscription active. I was played for a fool, nothing changed. SiriusXM’s plan worked and no one said a word about it on Wall Street or in the news or blogs. Everyone is too preoccupied looking at the stock market to realize the huge mistakes SiriusXM just made. Now they can blame the economy for why their numbers are going south and not answer questions about what the heck they were thinking.
My emails never got answered and the people that I know that did receive responses were getting canned letters. I was absolutely disgusted with their customer service and the degradation of the service immediately following the channel merger. I immediately started searching for alternative content delivery methods as the 'new format’ content was yet more recycled mainstream pop media invading all channels including the alternative music stations adding Britney Spears, Pink and Justin Timberlake’s etc. of the world.
Don’t get me wrong, pop media type of content is good on some channels for those listeners who enjoy that content; however, SiriusXM took it one step further with their channel axing in November to totally bland out their niche market. Channels that had creative content like their punk, jazz, electronic and dance music lineups were suddenly replaced with mainstream pop or replaced with extremely repetitive content playlists (literally hear the same song twice in an hour sometimes). My Ipod shuffle feature can do a better job than that!
The satellite personalities that once made the selections and occasionally spoke for a few minutes to give music news or music requests were let go. They were replaced with very generic non-creative and non-entertaining playlists. It seems the new programming management had decided that mainstream pop media is king and axed the very nice niche market they had created. I agree that those ‘alternative’ music types aren’t the bulk of the subscriptions but they tend to carry a lot of political weight when it comes to public opinion of ‘the cool’ content delivery mechanism. Think of it like how Apple’s ‘alternative’ people brought their products back to the market by storm (once Apple had a quality product again). Those ‘alternative’ customers are usually the biggest proponents of service/products. Those customers were run off by the ‘new’ content and complete lack of SiriusXM’s understanding of their own content.
I would *RUN* from this company in its current state. I have a friend who has had free service for going on 5months now and he says it’s still the same song and dance and SiriusXM has done little to nothing to remedy programming problems.
If you want the next generation of media delivery that will make money look for Pandora (pandora.com) or Slacker (slacker.com) or something similar. The ability to play music over your computer (in a web browser) and save a playlist, have ‘favorites’ AND have an application version of that content on your iPhone or Blackberry that has that the same music list (and the ability to add favorites) AND a skip song feature that you can STREAM in your car via an Aux-In port is the next big thing.
This new form of media delivery will have to be much more integrated for mainstream people to pick up on it (obviously not everyone has a Blackberry or iPhone) but at least for me I get the content that SiriusXM once provided back at almost a 1/3 of the cost! No longer are we as consumers enslaved to FM radio or now the dysfunctional SiriusX’s reach. Now for $49/year (or free if you can stand the 1 commercial every 20minutes or so (a joke compared to FM)) you can stream internet music (and a customized playlist) right into your car (and yes this works wonderful over EDGE (doesn’t even need 3g). It’s great quality too and doesn’t drop out much at all surprisingly! It also worked great with little to no problem driving to Austin from Dallas. A new age of car media access has begun assuming Ma’Bell or Verizon etc. don’t pull the plug on it.
I’m interested to see if this type of media will also have ‘talk’ format as right now it does just music but I’m very impressed so far. Clearchannel has jumped in the lead with their ‘I Heart Radio’ application on iPhone that lets you stream FM radio from other markets to where ever you are. For example, one of my favorite talk radio shows is broadcasted delayed here in Dallas but plays live in Houston. Clearchannel’s app lets me listen to Houston’s market (and dozens of other cities), I’m very impressed! This new age of content delivery is exciting and we’re just now scratching the surface!
On Mar 09 07:33 PM Tyler Savery wrote:
> Yes, the debt still exists, and it is not inexpensive. However,
> the biggest issue with the debt was the timing that it was all due.
> If the company can bring together their synergies, execute on a business
> model that works, and grow the subscriber base, the debt becomes
> more workable.
>
> I was in no way truing to imply that the debt is gone. What I am
> saying is that the business at hand is no longer the debt. The business
> at hand is growing and gaining the confidence of the street.