Sirius Is Finally in the Right Place at the Right Time

When Sirius XM (SIRI) released its 10K results, I was very negative on the company’s outlook. My opinion was and remains that the company needs to do more in the way of marketing if it is not only to survive but thrive. It may be that my doubts were unwarranted. SIRI stock has seen a dramatic increase on a percentage basis since the release of the report. The conference call was met with approval, as shares are up more than 21% Thursday.

The company provided a much clearer perspective on the benefits of the newly merged entity. Despite a horrible economic landscape, the synergies of the merger are paying huge dividends. Synergies have resulted in greater revenue growth and lowered costs. The company is operating with the frugality required to survive this difficult economic climate.

Although the news of new Apple (AAPL) applications got most of the media’s attention, the real news I believe can be found in the hints that the company provided during the call. As an example, the company spoke of the negative impact that the closing of Circuit City had on its retail sales. The discussion that followed brought with it an acknowledgment that the company forecasts more traffic in lower priced retailers, and a desire to do more in that area going forward. When someone mentions low priced retailers, my first thought is Wal-Mart (WMT).

Getting involved on a larger scale with companies like Wal-Mart is good, but there is no way that Wal-Mart will provide the solutions the company seeks without an aggressive marketing campaign to support it. With a simple marketing effort, the company’s products may end up on the shelves of high traffic auto parts retailers such as AutoZone (AZO). As more and more people seek to repair their older cars rather than purchase new ones, getting the product in these types of stores will help retail sales recover from the big electronics retailers which have seen foot traffic come to a standstill.

It just so happens the company mentioned a marketing push as well with the company hinting at a plan to deal with declining auto sales. This is what the company has been missing and the street seems to think that Sirius XM is at the right place at the right time as its shares continue to rise.

Position: Long Sirius XM

Comments

[tech man:]

excellent report brandon. love to see someone admit they may have been wrong. builds character. thanks mel for doing what you do and looking for the common share holder. hang in there guys we haven't seen nothing yet. sorry short sellers, hopefully you time is over for a while. y.m.

Mar 13 07:04 AM

[Crankly09:]

Indeed and all the stars are aligning for SIRI....Nothing but rewards of our long stuffering is ahead.

Cramer, Goldman, Shorts-GOODBYE!!!!!

Mar 13 07:36 AM

[sirixm:]

Ethical traders 1 - 0 Short sellers (shorties).

Like criminals, the shorties will just keep coming back for more. Like criminals, they will eventually get caught out. I look forward to the final verdict.

Mar 13 08:03 AM

[ZenInvestor:]

Well said. Auto Zone and WalMart are both targeting the right audience for SatRad. Things are looking up, and the addition of Malone Maffei on the Board is also offers two strong voices with a keen understanding of the marketing and product positioning that that has been missing from SIRI.

Mar 13 08:06 AM

[GetSIRI:]

I was in Best Buy on Monday and couldnt find the Sirius equipment anywhere. Thats not good for a company trying to get it products to market

Mar 13 08:49 AM

[MLSiri:]

I totally agree with the need for a broad promotional blitz. With the Liberty Media partnership you would hope there will be some synergies to cross pollinate the subscriber base. Also, almost every piece of marketing mail I receive has a DirecTV promo with the logos of all of their corporate partners. Hey, just add Sirius XM’s!

I’ve mentioned this several time on SB, the media blitz can include a cool Super Bowl ad that could be the opportunity to announce a brand new product (a la the Owellian-themed Super Bowl ad that launched the Apple Macintosh in the 1980s). This could then be the Sirius BUZZ of the office water cooler discussions the following Monday, and generate new revenue streams!

Mar 13 09:14 AM

[rtatp31:]

The shorts will be gone soon come April and the re-intstatment of the uptick rule.

Mar 13 10:31 AM

[BigVinnie:]

I don't think so. You should of seen the interview between Jon Stewart (Daily Show) and Jim Cramer last night on the daily show. There was nothing funny about that interview. It is an attack on short sellers that have disrupted and robbed our market place for far to long.
I think hedge funds are taking a break for a while from short selling. Price of bonds for now are going up, and Goldman Sachs doesn't have the pull or leverage needed to buy these bonds, (or they could, but then you could start to see the manipulation unfold all over again.) Debt for now is bought up by liberty so there is technically no ill effect or strain it can present to the company.

Sirius will ride steady and hold at about .25~.28 cents, and it will probably hold there because of several factors.

1.) Q1 of 09 report may look worse than Q4 of 08.
2.) Advertising may drop even lower to the 30%~35% range
3.) Churn could possibly be on the rise between 1.8% and 2.5%
4.) We all know that sirius/XM hasn't made any dramatic changes to the company until march of 09 so we will have to sit and watch how the q1 of 09 played out.




On Mar 13 08:03 AM User 370866 wrote:

> Ethical traders 1 - 0 Short sellers (shorties).
>
> Like criminals, the shorties will just keep coming back for more.
> Like criminals, they will eventually get caught out. I look forward
> to the final verdict.

Mar 13 10:33 AM

[shure46:]

Stewart / Cramer interview is definately worth a few minutes of your time

Mar 13 11:23 AM

[Neal Barkett:]

Stewart took it to him and didn't let up. Cramer admitted he was part stock guru and part entertainter. His credibility is dropping. If you watch his show you have to realize there is no way the man knows just about every stock in depth. Over the long haul he will fade away to at least the point where he won't move a stock overnite. Even his antics are getting old and boring.

Mar 13 01:27 PM

[Neal Barkett:]

rtatp31, You bring up some solid points. The one variable that could change is I beleive that shortly we will see some new innovative ideas coming out that will add new dimensions to the Sirius Xm "Nation" that will make the company so much more diverse that it will not only stabilize the company but take it to a point where there are multiple income streams that will make this company a media powerhouse. It's not just the money & co-op marketing Liberty brings to the table but the innovative mental synergies that will bring back the exictment of wanting to be part of this newly merged company, due to a new vision of potentials that could be achieved. Keep in mind that a stock's price is moved by its percieved future potential. So hang on as this stock moves steadily upward for the forseable future.

Mar 13 01:45 PM

[HCSKnight:]

You're right in the points you make, but you're also missing the going forward company.

SiriXM is moving away from a being ONLY a content provider to cars and moving toward being a content provider to individuals.

SiriXM doesnt want to be in the business of making, being dependent upon or being tied to "SiriXM radios", whether it be cars or the personal type, Stiletto's. They will continue to support them, but it is not their future or where they are going.

Think of a company that owned all the cable companies in the country.... That's a far closer business analogy than to keep talking about or looking at SiriXM as a "car radio/media content" provider.

That more people havent figured this out is very very good for people trying to get in.

Not too far in the future you will begin to see the analysts and industry commentators beginning to talk about the "transformation" that SiriXM has begun to make and the growth from these moves.

HCSKnight

Mar 13 02:04 PM

[newb911:]

GO SIRIUS GO!!

Mar 13 03:14 PM

[horton1212:]

Anybody hear any more news of a reverse split?

Mar 13 03:59 PM

[holmesnmanny:]

No, and let's all hope we don't. Reverse stop splits are never good for investors.


On Mar 13 03:59 PM horton1212 wrote:

> Anybody hear any more news of a reverse split?

Mar 15 04:05 AM