Sirius Still Promising, Despite Disappointing Earnings

As the expected somber news of Sirius' (SIRI) earnings call drilled the stock by 20%, we now find that it seems to be holding at a .40-ish support trend line. Subscriptions are down as new car sales continue to plummet. Revenue is up but let's face it, we still have a speculative stock on our hands. OK, let's speculate on a few small points.

1. Toyota (TM) recently announced that they are getting on board and putting satellite units in more models. To quote a recent article from The Wall Street Journal, "Toyota Motor Sales USA, says satellite radio was factory installed in four times as many cars in the year ended March 31 as in the year-earlier period. Growth rates should be similar this year." You mean customer conveniences are integral to selling a car?? Gee, that's a shocker.
2. The new car market at some point will recover, especially when the used car market prices get too high, which is already happening.
3. Terrestrial radio will continue to lose market share when sales of new car radios offering a la carte subscriptions begins to take hold.
4. Apple (AAPL) applications are paving the way for universal cell phone apps.

None of these points are individual home runs and of course, the situation with GM (GM) and Chrysler is definitely not helping the near term prospects. But looking at it from a long term business perspective, I see some great things in the works.

Yes, it was unfortunate that Sirius was dealt a double haymaker over the last two years. First came the FCC slowly and methodically grinding the merger on wet stone for a year; closely followed by the current market melt down.

No one can truly guess what the price of this stock will be and there are passionate arguments on either side as to whether or not it is even worth owning. Open interest options activity for the rest of 2009 $1.00 call strikes and Jan 2010 $ 2.50, $5.00 and $7.50 call strikes are suspiciously high, yet I can't think of any near term catalyst that will crank this sucker much over the 200 day moving average which is somewhere around the .70 mark.

I truly hope, barring a reverse split, that the options traders prove me wrong.

No matter what happens in the short term, here is one final point that I think should be very clear to the bulls and bears.

Does anyone really think that satellite radio is not here to stay? If you raise your hand, you are a fool.

Disclosure: Long SIRI

Comments

[drevil6406:]

Gino..the earnings were not the dissapointment so much as the misrepresented subscriber losses..and that has been the basher focus since the CC. I would change that title if I were you...but other than that not a bad article.

May 12 10:05 AM

[burnout:]

SA titled the article. The original title was...
Siri - In The Ring With The Bulls And The Bears

May 12 10:24 AM

[1more4me:]

What if that unusually large open interest into Jan was related to 2 or more big hedge fund managers beginning to roll thier strategies from short- to long? If the MM's are content to let the SP set in range, when those several daily 1-2 million share flat trades finish there will be a big upside gap to fill. I know that several folks in my Invgrp have finally closed out all of thier short positions in this last week and all had them from early last year. I covered the last of my $1.20's back at .30 so until it gets to a buck that play is out- but before then I think the SEC will change the game. Either way- LONG SIRI- PEACE

May 12 11:01 AM

[Mr. Stupid:]

Gino, The iphone app will be announced soon and that will be a nice catalyst for a pop. New cars sales will improve later this year. Even with Chrysler and GM troubles people will buy when the economy improves.

Frank

May 12 11:58 AM

[Spiderman4:]

Siri will be at $1.00 or more by the end of the year..

May 12 12:05 PM

[dead elvis:]

Sure satellite is here to stay- so why would there be an argument that the stock isnt worth owning as you suggest.

"there are passionate arguments on either side as to whether or not it is even worth owning. "
"Does anyone really think that satellite radio is not here to stay? If you raise your hand, you are a fool."

please respond and clarify your arguement- thank you

May 12 01:49 PM

[SIRI MAN:]

This is the best buy on the market right now. .39/share Come on .Get in, tell your budiies to buy some and let's watch this Company grow. If it doesn't, it will be the best and safest bet you have ever made.

May 12 02:21 PM

[jmsithy:]

this stock has always been at .38 since about 4 weeks ago / never be fooled if it goes beyond .38 for now / forget that it went up to .50 twice use the model when it was at .13 it went to .19 about 4 to 5 times before it evn broke .20 / Until any Real news comes out this stock wont see above .50

May 12 02:29 PM

[dead elvis:]

Dino -please respond to my writing as I have to yours.

You are saying that anyone who thinks the stock is worthless- is because they are a fool and satellite is here to stay?

Is this correct?

May 12 02:34 PM

[User 412636:]

A huge part of getting SIRIUS as low as it is now was the credit market almost driving it into bankruptcy. The credit market has imporved. Apple and eventual growth in car sales will drive the price back up to at least $1.00. Their cost savings since the merger and fewer people shorting their stock will also help. Can't forget speculative investors jumping on the bandwagon late to drive the price even higher once it shows momentum. The loss of subscriptions was related to recent rate increases and will turn out to be a one time knee jerk reaction.

May 12 02:39 PM

[SIRI MAN:]

Use this Company to show your kids how to make some money. They have $50 or $100 bucks. Let them buy 250 shares and hold for a while. Watch them get excited (or not). It all depends on the economy - jobs, auto industry, world markets. They have 3 satellites and much communication equipment. They are not going under. Maybe a sale or merge, but a great low cost economic lesson. Long for huge profit.

May 12 02:41 PM

[Mr. Stupid:]

Is there a chart that will tell me what the high will be for siri the rest of the year???

Is there a link for this?


Frank

May 12 02:41 PM

[llkwildcatt:]

duuu witch way do I go earny,>>>>... :-)

May 12 02:46 PM

[jmsithy:]

No real chart just look what it was at .13 back in Feb how it went up and down for 3 weeks inbetween .13 and .19 and go off that there is no real stability for this stock / any slight news and I do mean lagit news not oppinions and speculations that we have seen, you will know then the stock which way it will go.


On May 12 02:41 PM Mr. Stupid wrote:

> Is there a chart that will tell me what the high will be for siri
> the rest of the year???
>
> Is there a link for this?
>
>
> Frank

May 12 03:00 PM

[jmsithy:]

Siri man is like the Anti-wholesalecd

May 12 03:02 PM

[SIRI MAN:]

Thank-you.

May 12 03:46 PM

[SIRI MAN:]

Let's try something. Could the internet and contacts be such a huge tool that network buying could pyramid this price up tremendously? Do you want to get in early? Oprah just proved the power of the internet with her KFC coupons. They had to cancel. Tell your friends how low this stock is. Spread the word....

May 12 03:50 PM

[SIRI MAN:]

Expect some huge news Friday. Direct TV will buy SIRI. Just a feeling.

May 12 04:05 PM

[dead elvis:]

SM

start on some acylovir for that feeling before it becomes a full blown rash

May 12 04:12 PM

[SIRI MAN:]

Nice.

May 12 04:16 PM

[burnout:]

JAY BOY BILLY
May 10 09:33 PM |Report abuse| Link | Reply
00

wholesalecd
193 Comments

Follow
OK, We will all see if i'm "LUCKY" AGAIN this week. My predictions:

Friday close - .4089

Mon - drop .04c Actual down - .0089 missed by 77.25%

Tue - drop .03 Actual down - .004 missed by 86.66%

Two day total missed by 81.71%

Wed - drop .03

Thurs - up .02

Friday to end week down to .30

That's my take for this week.

We will see,

JAY BOY BILLY
May 10 09:33 PM |Report abuse| Link | Reply
00
Strike one.
Strike two.

May 12 04:18 PM

[jmsithy:]

Well I am actually hoping that he is right about Thursday going up by .02 want to see some green when it comes to the numbers


On May 12 04:18 PM burnout wrote:

> JAY BOY BILLY
> May 10 09:33 PM |Report abuse| Link | Reply
> 00
>
> wholesalecd
> 193 Comments
>
> Follow
> OK, We will all see if i'm "LUCKY" AGAIN this week. My predictions:
>
>
> Friday close - .4089
>
> Mon - drop .04c Actual down - .0089 missed by 77.25%
>
> Tue - drop .03 Actual down - .004 missed by 86.66%
>
> Two day total missed by 81.71%
>
> Wed - drop .03
>
> Thurs - up .02
>
> Friday to end week down to .30
>
> That's my take for this week.
>
> We will see,
>
> JAY BOY BILLY
> May 10 09:33 PM |Report abuse| Link | Reply
> 00
> Strike one.
> Strike two.

May 12 04:31 PM

[jmsithy:]

They will not be able to buy Siri do you mean the whole company? They will not be able to because of the poison Pill if you mean the whole company


On May 12 04:05 PM SIRI MAN wrote:

> Expect some huge news Friday. Direct TV will buy SIRI. Just a feeling.

May 12 04:33 PM

[Neal Barkett:]

Nice to the point, article. Sirius Xm's time is coming, it's just a matter of when? This company faced the perfect storm and weathered it. Know it looks as though the stars are aligning and there may be some light at the end of the tunnel. When? No one knows for sure but the economy has a huge part in this happening. Also what Sirius Xm does in the in the mean time will speak volumes. They have to get up to speed after the long merger process.

May 12 04:50 PM

[SIRI MAN:]

There is no poison pill in this market. Anything goes as long as the market does not reverse. Contracts, mergers, splits, all can be negotiated. This market is running on good news with stocks under $40 bucks. Balance sheets don't seem to matter. SIRI's assets have real value and that is their saving grace. AMEN


On May 12 04:33 PM jmsithy wrote:

> They will not be able to buy Siri do you mean the whole company?
> They will not be able to because of the poison Pill if you mean the
> whole company

May 12 05:11 PM

[Mr. Stupid:]

JBB said this stock will fall to .25. I just saw some of his comments.

Now i'm scared since I bought 5,000 shares yesterday.

Frank

May 12 05:41 PM

[jmsithy:]

it wont fall to .25 it will fall to .15

j/k :) seriously it will not go to .25 unless it gets downgraded back to ccc- from ccc and since this is running on profits that will most likely not happen


On May 12 05:41 PM Mr. Stupid wrote:

> JBB said this stock will fall to .25. I just saw some of his comments.
>
>
> Now i'm scared since I bought 5,000 shares yesterday.
>
> Frank
>

May 12 05:56 PM

[jmsithy:]

SIRIUS XM RADIO INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Three Months
Ended March 31,
(in thousands) 2009 2008
Cash flows from operating activities:

Net loss
$ (50,411 ) $ (104,118 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization
82,367 26,906
Non-cash interest expense, net of amortization of premium
4,429 1,004
Provision for doubtful accounts
7,575 2,560
Loss from redemption of debt
17,957 —
Amortization of deferred income related to equity method investment
(694 ) —
Loss on investments
7,906 —
Share-based payment expense
20,179 22,262
Deferred income taxes
1,115 543
Other non-cash purchase price adjustments
(41,150 ) —
Changes in operating assets and liabilities:

Accounts receivable
(344 ) 18,765
Inventory
4,573 4,193
Receivables from distributors
(276 ) (9,988 )
Related party assets
8,880 —
Prepaid expenses and other current assets
22,104 14,256
Other long-term assets
21,995 3,256
Accounts payable and accrued expenses
(53,339 ) (116,741 )
Accrued interest
(18,087 ) (11,885 )
Deferred revenue
47,954 14,712
Related party liabilities
(8,108 ) —
Other long-term liabilities
(7,754 ) (5,017 )

Net cash provided by (used in) operating activities
66,871 (139,292 )


Cash flows from investing activities:

Additions to property and equipment
(71,140 ) (39,225 )
Purchases of restricted and other investments
— (3,000 )
Merger-related costs
623 (10,018 )
Sale of restricted and other investments
— 5,008

Net cash used in investing activities
(70,517 ) (47,235 )


Cash flows from financing activities:

Proceeds from exercise of warrants and stock options
— 840
Preferred stock issuance costs, net
(3,712 ) —
Related party long-term borrowings, net of costs
211,463 —
Payment of premiums on redemption of debt
(10,072 ) —
Repayment of long-term borrowings
(198,993 ) (625 )

Net cash (used in) provided by financing activities
(1,314 ) 215

Net decrease in cash and cash equivalents
(4,960 ) (186,312 )
Cash and cash equivalents at beginning of period
380,446 438,820

Cash and cash equivalents at end of period
$ 375,486 $ 252,508



Supplemental Disclosure of Cash and Non-Cash Flow Information

Cash paid during the period for:

Interest, net of amounts capitalized
$ 85,810 $ 28,554
Non-cash investing and financing activities:

Common stock issued in satisfaction of accrued compensation
— 8,729
Common stock issued in exchange of 3 1/2% Convertible Notes due 2008, including accrued interest
— 31,249
Common stock issued in exchange of 2 1/2% Convertible Notes due 2009, including accrued interest
35,164 —
Release of restricted investments
138,000

May 12 06:02 PM

[Jerrold Wil...:]

I have about 60,000 shares of SIRI. I think that when they announce the iphone app, the stock will take an immediate spike to over $.50. I don't think people realize the potential of the iphone app. I personally dont have an iphone but millions do. First, it will give about 7 million more people the potential to try the service. With cars i belive the rate of keeping the service is about 40%. If they can get 20% of iphone users to buy some type of service that would be great. Now, what people don't appreciate is how the iphone can help add sales to car radios. Think how many people cancelled their trial service or service due to not spending a lot of time in the car. They figure great service but, I only drive a half our or so a day or whatever. Why pay $12.95 for that? I would agree. Now if they have an iphone, they can now listen outside of the car without having to buy equipment as they did in the past or try to listen on corporate computers which were probably blocked. Now you can at work or wherever take you sirius xm with you. If they keep the cost the same, you would pay an additional $2.95 for internet service. So figure about $15.00 a month for car and iphone. Long term contracts could save money. This needs to be promoted! open up all sirius xm radios for a week to let them know they can use on iphones, give iphone a free trial and offer iphone/car special rates. Then hire me as marketing manager...we need commercials. All pro arenas should have sirius xm ads to be seen by those in arena and tv! This should not be a penny stock!!!I've had my xm since 2002 and would never give it up! Everyone i introduced it to loves it. Except my cousin who likes to download music and listen to the same 12 songs over and over!

May 12 06:08 PM

[Play:]

Re: iPhone App.
With the 3.0 software, the could create a radio that the iPhone could plug directly into. One could then listen to the sat radio or their own music. Or the iPhone App could utilize the 3G network to stream music directly into the radio via the a MP3 player jack that is in the car. This app would work well in cities where ATT has a strong presence.

May 12 07:08 PM

[Jackwyron777:]

im not 100% sure when Yahoo adjusts or updates their finanical data, but look at the "MAjor Holders" category of every company...look at SIRI...I see Barclays as of Dec 30 08....as long as they are in it, im staying in it...Buy and Hold!!!

May 12 07:10 PM

[Hawk180:]

In reading all the comments, I see one thing missing that SIRIUS/XM has on the market that is gaining customers on a daily basis. XM has a service called WXworks it is a weather downlink for aviators, mariners, land transport workers and farmers. For the aviators, an inexpensive receiver receives the satellite signal and overlays a real time weather graphic picture onto any compatable GPS. It is now available for mariners, truckers, railroad employees and outdoors enthusiasts as well. This product will save lives in the aviation community and on the waterways and seas, help farmers to see further out to know of approaching storms, and keep hikers and other outdoors people safe from incoming severe weather by providing an adequate warning so they can seek shelter. As this technology catches on, I believe you will see hundreds of thousands, if not millions of subscribers to this service. It will only add to the already growing customer base that SIRIUS/XM already enjoys. I see the stock growing to $1.00 and beyond in the not so distant future.

May 12 08:47 PM

[I'm Not Jim...:]

Hey, that's me . . . I'm a fool. lol

May 12 11:17 PM

[Mr. Stupid:]

I'm getting nervous about this stock o roooo....When will it elevate to more generous levels??

I beeez getting reallly anxious.

Please help,

Frank

May 12 11:41 PM

[Mr. Stupid:]

What will happen to the stock if this happens???

Please tell me it's good stuff ok

Frank


On May 12 04:05 PM SIRI MAN wrote:

> Expect some huge news Friday. Direct TV will buy SIRI. Just a feeling.

May 12 11:56 PM

[Paty:]

Your are not the only one Frank, I invested 100% of my baby college money in Siri. at this moment I am -$7,000. and I do not have idea what to do..... should I hold??? should I don't????....

Paty


On May 12 11:41 PM Mr. Stupid wrote:

> I'm getting nervous about this stock o roooo....When will it elevate
> to more generous levels??
>
> I beeez getting reallly anxious.
>
> Please help,
>
> Frank

May 13 12:05 AM

[srosteve:]

Sirus... good stuff, kind of reminds me of cell phones in their infancy. You knew it was the future, just unsure about how far. With Sirus it will depend on the economy and when the general public learns of it's advantages. No matter what your interest satellite has it and commerical free.

May 13 09:08 AM

[Krissie:]

Though, i liked the siri radio in my rental car, I wouldn't pay for their service. However, this will definitely hit a niche market. Wish I could afford it.

May 13 10:14 AM

[an american:]

i hope it does. i only have a thousand shares that i bought at .11. i would have bought a whole lot more when it dropped the next day to .05 except i felt like i was at a craps table on the wrong day. hmmm ... i'd be happy buying a few thousand more at .25. i am patient enough to wait years if i have to especially when we are talking about small change.


On May 12 05:41 PM Mr. Stupid wrote:

> JBB said this stock will fall to .25. I just saw some of his comments.
>
>
> Now i'm scared since I bought 5,000 shares yesterday.
>
> Frank
>

May 13 10:42 AM