Is Sirius Going Down the DISH Road?

Dish Network (DISH) lost subscribers and the stock price appreciated by 20%. Sirius XM (SIRI) lost subscribers and the stock price plummeted by a like number. In fairness, Dish posted a better than expected profit (that was crystal clear) as well. Sirius XM, with the exception of one time costs on the Liberty (LCAPA) deal, would have posted a better than expected loss. The difference between what happened to Dish and what happened to Sirius XM rests in expectations and the fact that Dish is making a profit. Is Sirius on a road that is similar to Dish? Only time will tell.

There are perhaps some lessons in the Dish earnings report for everyone. First and foremost was the expectation level. With Dish, although subs were lost, the expectation was that the loss would be greater. With Sirius XM, most expected a subscriber decline, but with very few exceptions, most were expecting the number of de-activations to be smaller than it actually was. Perhaps, given the variables in how subscribers are counted at Sirius XM, there will always be confusion, and that confusion will always breed an uncertainty in the confidence of investors in the subscriber numbers.

In fairness to Sirius XM, the company warned of potential impacts of the Chrysler and GM situation. However, the real question is whether or not anyone has taken heed of that warning and adjusted their expectations. The company will be fortunate if Chrysler adds a number of subscribers near 100,000. I do not think most people grasp the gravity of that situation.

All of that being said, is there a point in time where Sirius XM can have quarterly results that bring an upswing to the stock? Likely that is still several quarters away, and while my opinion won't be popular among satellite radio equity fans, it is an opinion that is grounded in reality. Although adjusted EBITDA is projected to be at $350 million for 2009, there are still capex and interest expenses that are a reality and will be a weight on the stock.

What I would like to see the company do is hold an investors/analysts day. Invite analysts to the headquarters, and present a webinar that investors can view outlining metrics, deal structures, and projections. Offer up what they are based on, and get everyone on the same page with a much better idea about how to track things. The smart participants will build their respective models, and continue to update and cover the equity in a manner that generates realistic expectations.

Sirius XM has a passionate following that loves to delve into the information. One problem is that with the merger, a virtual blending happened and it has left many guessing or using poor assumptions. I realize that much of the information is there if someone would take the time to find it, but why not just simplify it and get it all on the table.

If Dish Network proved one thing, it is that despite a poor economy and dropping subscribers, revenue and stock price could both appreciate. In my opinion there is potential for Sirius XM to be on a similar path, but it needs to start with clarity.

Position - Long Sirius XM Radio, No Position Liberty, No Position Dish.

Comments

[User 412200:]

Tyler, your articles are sorry. They are never in sinc. One
day you talk great about Sirius, how they are going to surprise
shareholders,etc. Then other writers write in and you then
sway your articles as if you were always on their page.
I will never know about you.

May 12 02:14 AM

[dabx:]

I have been an investor with this company for a long time and I am I wish this company would answer their critics on a more timely basis. Maybe they should dedicate a channel for their investors that counters bad information released by the web/print/broadcast media

May 12 07:25 AM

[Spiderman4:]

Sirius will be a $1.00 or by year end..........!!!!!!!!!

May 12 08:14 AM

[Tyler Savery:]

41220.....

I am sorry you have that opinion. One thing you need to consider is that some articles are reports on the opinions of analysts. I cover those reports because they are relative to the subject of satellite radio.

In my opinion my thoughts on Sirius XM have been pretty consistent. I feel that there are short term challenges, but the longer term picture is much better.

By example, I expressed quite clearly the challenges the company would have with subscriber numbers in Q1, as well as what I felt would be highlighted in the call. I also stated that a lot of the reaction about the quarter would be determined in whether the press highlited the subscriber number or the adjusted EBITDA.

For the record, Q2 will have subscriber challenges as well, but again, that is short term.

On May 12 02:14 AM User 412200 wrote:

> Tyler, your articles are sorry. They are never in sinc. One
> day you talk great about Sirius, how they are going to surprise<br/>sha...
> Then other writers write in and you then
> sway your articles as if you were always on their page.
> I will never know about you.

May 12 09:26 AM

[dead elvis:]

Charger Putz-Whats wrong with being Jewish?
I have a good mind to wip you unclean sorry ass with a lawsuit thru the ACLU

I cant believe they allowed you to print such inflammatory antisemetic garbage

May 14 01:57 PM