Sirius XM Dances with the Bulls and the Bears

by Gino Lattarulo

As the expected somber news of Sirius XM’s (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 Radio 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 begin to take hold.

4. Apple (AAPL) applications are paving the way for universal cell phone apps.

None of these points is an individual home run and of course the situation with 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. 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 meltdown. 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

[User 368600:]

Transparent . . . .

Satellite radio is NOT here to stay.
It never WAS here to begin with.
Giving away radios and service = failure
Success = people wanting to pay for your product
Satellite radio is a complete failure.. . . Period.
OK. . . . here comes the insults from bagholders

Do you smell something funny?

May 19 08:39 AM

[dead elvis:]

tell us what you really think homo guy- dont hold back

only thing smelly is that pessimists or realists as u think u are, have no direction with regards to the future solidity of other options available-give us the future if it isnt satellite-will they just eventually fall out the sky and hit your oversized mufflered kia?

homo guy- I just got finished running 4 mi on my treadmill listening to "mother earth" radio-

coundnt wait for the next car dealer to scream in my ear,couldnt wait for the next lame country song that ya daddy wrote- was very motivational- that you obviously know little of what you speak.

by the way , since im the second person here, did you give yourself a plus one rating on your own piece????

May 19 09:11 AM

[Vince$:]

FloorHomo,

Times are tough and people had to cut their subs. What's so unexpected about that? If you told me 5 million people cancelled, then maybe you'd be right, but that's not the case is it?

You're wrong on so many levels. Sat radio is here to stay because so many people depend on radio to be entertained on the drive to work. Terra radio doesn't cut it anymore with the same 10 songs all the time and boring talent. People are fickle. They want variety and that's what Sat radio provideds: unadulterated variety.

What I do sense is something great just around the corner!

May 19 09:14 AM

[User 368600:]

On May 19 09:14 AM Vince$ wrote:

> FloorHomo,
>
> Times are tough and people had to cut their subs. What's so unexpected
> about that? If you told me 5 million people cancelled, then maybe
> you'd be right, but that's not the case is it?
>
Transparent. . . .

What if someone told you that
280,000,000 DIDN'T cancel because they never subscribed or plan to.


Do you smell something funny?

May 19 09:21 AM

[User 368600:]

On May 19 09:48 AM Vince$ wrote:

> Are you mildly retarted?

NO
Are you trying to compare this service to
> cable?

NO
What has 300 mil subs? The electric companies? I'm not even
> sure what you are saying.

Are YOU completely retarded?


Do you smell something funny?

May 19 10:10 AM

[User 368600:]

On May 19 09:48 AM Vince$ wrote:

> Are you mildly retarted?

NO
Are you trying to compare this service to
> cable?

NO
What has 300 mil subs? The electric companies? I'm not even
> sure what you are saying.

Are YOU completely retarded?


Do you smell something funny?

May 19 10:10 AM

[Hawk180:]

Floorhomo, is your name Charles Ergan? I'm beginning to think so. Or at least someone who has a vested interest in seeing Satellite radio fail. Satellite radio along with the weather downlinks, phone apps, internet and satellite telivision connections make for good diversified business and a large customer base. It is here to stay and will sustain growth over the long term. It seems as if you are trying to drive the price down so you can buy as many shares of SIRIUS as possible. Otherwise why would you be paying so much attention to a company you claim is doomed for failure.

May 19 11:26 AM

[Hawk180:]

Y'know, After thinking it over; maybe floorhomo is doing us all a favor. If those who are of the timid type sell out because of his ranting, then maybe the rest of us will be able to buy more at a discounted price. That way, when the price climbs, we will make more.profits. After all, T&R has re-evaluated SIRI and rank it as an outperform, up from neutral, Market Edge is still going with long. Thanks homo for the good work, Now it is not costing me as much to buy more.

May 19 12:23 PM

[User 368600:]

On May 19 11:26 AM Hawk180 wrote:

> Floorhomo, is your name Charles Ergan? I'm beginning to think so.

No

May 19 12:31 PM

[User 368600:]

On May 19 12:23 PM Hawk180 wrote:

> Y'know, After thinking it over; maybe floorhomo is doing us all a
> favor. If those who are of the timid type sell out because of his
> ranting, then maybe the rest of us will be able to buy more at a
> discounted price. That way, when the price climbs, we will make more.profits.
> After all, T&R has re-evaluated SIRI and rank it as an outperform,
> up from neutral, Market Edge is still going with long. Thanks homo
> for the good work, Now it is not costing me as much to buy more.

Transparent. . . .
You're welcome.
I also thank you, because I get a laugh out of reading about you
buying more. . . . So if you want to buy more @ a lower price,why do you argue with people that say the price is headed down?
Dont bother answering because I'm not really interested in an answer from someone who considers farts entertainment worthy of PAYING MONEY for.

Do you smell something funny?

May 19 12:39 PM

[BerkeleyBob:]

Look, I have said it before and I will say it again. Great company, not so great investment/speculation. I am a long term and satisfied subscriber. I am willing to pay a relatively nominal amount for commercial free music to my taste while driving. The FCC and the NAB, never mind the recording industry, did an unconscionable mugging on Sirius/XM. Financial survival will require time, cutting some high cost contracts and general economic recovery. Not a high probability in the short term. I sold SIRI long ago, did not see anything good happening to the stock. Don't know why this company attracts such passion, love-hate and unsophisticated opinion.

May 19 12:53 PM

[User 368600:]

On May 19 12:53 PM BerkeleyBob wrote:

> Look, I have said it before and I will say it again. Great company,
> not so great investment/speculation. I am a long term and satisfied
> subscriber. I am willing to pay a relatively nominal amount for commercial
> free music to my taste while driving. The FCC and the NAB, never
> mind the recording industry, did an unconscionable mugging on Sirius/XM.
> Financial survival will require time, cutting some high cost contracts
> and general economic recovery. Not a high probability in the short
> term. I sold SIRI long ago, did not see anything good happening to
> the stock. Don't know why this company attracts such passion, love-hate
> and unsophisticated opinion.

I do know why;
Because the average IQ of someone who would invest in SIRI with its absolutely miserable fundamentals is far below the average investors IQ. (Case in point check their spelling) With their intelligence ( or should I say lack of) makes them an easy target for shills and also limits their response to intelligent negative facts with either insults or some sort of "I know you are but what am I" reply.
Satellite radio is a complete failure.
Period. Done. Indisputable. Billions in debt and never made a dime.
People dont want it.
End of discussion.

May 19 01:08 PM

[Vince$:]

FH-

I think you invested when Sirius was $40 a share in 2000 and lost everything. Is that what happened? It's ok. We all make mistakes.
Thanks for the warning.

V$

May 19 01:36 PM

[dayworker:]

Iphone apps will kick Sirius into high gear. It will be portable and easily accessible. Just think hanging out at the beach, tuned into sirius and
your ear buds on and that's a wow factor. Go Sirius and iphone.
Great match. Sirius anytime, anywhere, no cars necessary.

May 19 02:43 PM

[Hawk180:]

Well no, I dont listen to Stern. I personally find it disturbing that a large number of people in this country do define his show as good radio. As far as intelligent investing, I suppose that a 97% portfolio increase since March is just lucky guesses. I'm not trying to insult anyone. I am just making an attempt to figure out your rationalization behind your comments. It really doesn't matter though. I will invest in what I believe is a good investment and other are fee to do the same. Good Luck to all!


On May 19 12:39 PM FloorHomo wrote:

>

May 19 03:22 PM

[hfamortgage:]

FloorHomo- do some research. Media entertainment companies have huge upfront costs and that is why the company is in so much debt. Guess what? Those costs are now accounted for. SIRI does not have to compete with XM, which spiraled auto and talent contracts out of control. Have you seen this translated in the past two quarters since the merger? Definitely! The company is cash flow positive. The company is now projected over $350,000,000 EBITDA. Yes, in this environment. Once auto sales go back to 14M a year, SIRI will be able to repay back the debt and more. A quote from Mel back in March of this year, "In the next couple of years, we won't just be profitable but very profitable". Malone seems to agree as well by investing $530M dollars into the company. There are many more reasons, but I don't want to waste my time on you. Numbers speak for themselves. Check it out. Over 15.4 Million self paying subscribers and counting...

May 19 03:37 PM

[boston 1:]

I read all the childish jibberish on the sirius stock and am I the only one that sees the money making oppurtunities this stock has presented in the past months. Wether the stock price goes up I can not believe that I am the only one selling on the ups and buying on the lows. On the recent rise and fall I managed to increase my position by 25% and still have my core shares just in case it goes up on me while I am asleep. the product is good and every stock worth its stuff is doing badly at present from last year's high. We can bash the stock and listen to the morons state thier opinions and if we listen to them we will get angry and loose money just like they might have therefore are now just so angry to see people like myself whom have believe and bought and sold and held also make bags of money. Sirus is a great stock but please sell on the ups and buy on the lows and keep adding to your positions and even if the stock holds at these levels why should we fear the great gains we have already made. Car makers will continue to add sat radio to their cars to intice new buyers and if you doubt sat is on its final breath, why would the Toyotas of the world keep betting on placing such items on cars. I could bash any stock at the moment and sound knowledgeable but how am I going to be thought of a year from now. Speculation is a hard business and if you do not have the stomach for it buy bonds or keep it in a savings account.
One thing I do think make grown up comments or just keep your post to a minimum becase it is hard trying to by pass all the nonesense just to read the few good comments we have come to rely on. JMO.

May 19 03:52 PM

[Anastasia:]

Floor Homo says the same thing on Aol siri board he lives with his mommy in the basement his financial savvy is really meant to be desired!!!

May 19 04:08 PM

[Stan Muse_:]

Satillite Radio is here to stay. The big question is what is the saturation point for people who will pay for it in North America. Is it 20M? , 30M?, certainly it is below 100M. But what is it? And how many subscribers does SIRI need in order for the company to make a respectable profit and for the stock to be viable? I had the break-even number at about 9M for SIRI before the merger, and about 15M to start showing a reasonable profit. The merger greatly raised those numbers because of the additional debt but I do not have a good feel for what they are. I think maybe 25M to start breaking even and 35M to start showing a workable profit. The question is, can we get there before we reach the NA saturation point? I wish someone would write an article to address these questions.

May 19 11:03 PM

[User 368600:]

On May 19 04:08 PM Anastasia wrote:

> Floor Homo says the same thing on Aol siri board he lives with his
> mommy in the basement his financial savvy is really meant to be desired!!!

Transparent. . . .

Do you smell something funny?

May 20 08:38 AM