Look Ahead to Sirius XM's Q2 Numbers 12 comments
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By Brandon Matthews
Now that the June 2009 auto sales data has been released, it’s time once again for me to go out on the proverbial limb in keeping with the long standing tradition of estimating Sirius XM’s (SIRI) quarterly subscriber numbers. Despite the fact that the Sirius XM story is that of revenue growth rather than subscriber growth these days, there is a certain aspect of the media that refuses to let go of the past, present company included. The difference is that at Satwaves, we don’t pick and choose which information we publish.
Predicting subscriber numbers has always been especially challenging to me. Years ago several of us would track activation numbers reported by new subscribers in an effort to accurately predict the subscriber count. This worked well until the company discovered the ingenious plan and began using randomly produced activation numbers rather than the sequential version we had become accustomed to.
I’ve always been the kind of person who could spot a pattern, except when it comes to Sirius XM’s subscriber numbers. With SIRI, the game is always changing and therein lies its appeal to me. First quarter 2009 came in far below most people's expectations. Although most blame the auto industry for Sirius XM’s sub par performance, I take exception to that. I believe the first quarter to have been an anomaly based on a biased media’s attempt to bury Sirius XM Radio in the bankruptcy graveyard. Thousands upon thousands of articles were written telling of the demise of Satellite Radio. Hardly a hundred were written regarding its survival. The newest auto sales reports demonstrate clearly that consumers in general steer clear of companies whose futures are unknown, such as General Motors (GMGMQ.PK) and Chrysler.
Despite the negative press, Sirius XM lives on. There have been many variables introduced this quarter also. There are auto plant shutdowns to contend with which are actually typical to some extent at this time of the year. The GM and Chrysler bankruptcies plague any attempt at predicting accurate results. On the positive side, Sirius XM has introduced six new certified preowned programs. Much attention was given to the Volkswagen announcement, yet the more important GM, Honda (HMC), BMW and regional Ford (F) programs have been overlooked by many.
In lieu of such variables, I have instead decided to use historical averages of total auto sales as a guide. With that in mind, I feel comfortable in my estimates that Sirius XM will report approximately 84,608 positive net additions for Q2 on an increase of 259,608 OEM net additions with a loss of 175,000 retail subscribers. More importantly, I believe that Sirius XM will offer an upside earnings surprise based on new incremental iPhone and Internet royalty revenues (people locking in longer term plans in advance of the 2.00 fee).
For a full break down of auto sales data and historical subscriber reports used in this article, visit us at this Satwaves Forum thread.
Position: Long SIRI
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This article has 12 comments:
Given the massive short position that exists in SIRI, and the apparent downside manipulation that has persisted against the recovery of this stock, the prospect of possible S.E.C. action to limit and constrain this type of activity can only be viewed as an emerging positive influence for the stock that has yet to be reflected in price performance. All of this reinforces the technically strong framework that now prevails, leading to firmer support on pullbacks and a tendency to continue to probe the upside. Potential remains projected toward $1.00+ over the next six months to one year - and most probably higher over the longer term.
Stay the course.
On Jul 06 06:37 AM R A F wrote:
> Of importance for investors and traders to note: The New York Times
> (Friday, July 3) published a prominent article in the Business Section.."S.E.C.
> May Reinstate Rules For Short-Selling Stocks".
> Given the massive short position that exists in SIRI, and the apparent
> downside manipulation that has persisted against the recovery of
> this stock, the prospect of possible S.E.C. action to limit and constrain
> this type of activity can only be viewed as an emerging positive
> influence for the stock that has yet to be reflected in price performance.
> All of this reinforces the technically strong framework that now
> prevails, leading to firmer support on pullbacks and a tendency to
> continue to probe the upside. Potential remains projected toward
> $1.00+ over the next six months to one year - and most probably higher
> over the longer term.
> Stay the course.
On Jul 06 07:20 AM jmsithy wrote:
> Why would this reach a dollar since this fell just as quick when
> this was at 2.00 even 5.00 and now since this is under .50 would
> make this even harder to go anywhere, unlike Citi which went under
> a 1.00 was able to pull it self out of the fryer. I guess since
> Gov and SEC takes more care of some stocks than others
On Jul 06 07:20 AM jmsithy wrote:
> Why would this reach a dollar since this fell just as quick when
> this was at 2.00 even 5.00 and now since this is under .50 would
> make this even harder to go anywhere, unlike Citi which went under
> a 1.00 was able to pull it self out of the fryer. I guess since
> Gov and SEC takes more care of some stocks than others
On Jul 06 08:21 AM JWticker wrote:
> can someone address my question please....... Why is the satalite
> news not being talked about?! (New satalite, better clarity, more
> bandwidth, etc.)
Related to subscriber numbers- In the headline here: news.prnewswire.com/Vi...=
The headline is "over 1 million Ap Downloads" and the story goes...
For the sake of estimating the next Quarter and since the 7 day trials are starting to end for the first of those that downloaded- any idea of how many of these are signing up for paid subscriptions on thier devices or how many of those added to exsisting SIRI service.
Any info would be great. Thanks
LONG SIRI--- PEACE
Representative Barney Frank, left, urged Mary L. Schapiro, right, head of the S.E.C., to reinstate a rule that restricts short-selling.
By GERRY SHIH
Published: July 2, 2009
They have been reviled as the bad hats of Wall Street, nefarious traders who cashed in on the market collapse and, some insist, helped precipitate it.
Now short-sellers, the market skeptics who correctly called last year’s downturn, are coming under even more unwanted scrutiny, this time from federal regulators. The Securities and Exchange Commission appears poised to reverse itself and reinstate rules that would make shorting stocks — that is, betting their prices will decline — somewhat more difficult.
Whether the S.E.C. will go far enough to satisfy the many critics of short-sellers is far from certain. The controversial role of these investors has divided not only the financial industry, but also federal regulators. As the S.E.C. considers its options, the debate is heating up.
Hedge funds and big pension funds argue that short-selling is vital to modern markets. Such trading not only enables investors to hedge their risks but also to ferret out weak companies or, as in the case of Enron, outright frauds.
But many banks, whose stocks came under attack last autumn, maintain that unfettered short-selling is dangerous. The shorts, their argument goes, helped bring down Bear Stearns and Lehman Brothers last year.
Many people on Wall Street and in Washington dismiss such claims, arguing that while short-sellers may have accelerated some stock declines, the real problem was the precarious state of the companies’ own finances.
Given the climate in Washington, as well as the running suspicion of Wall Street, new rules seem inevitable, analysts say. Mary L. Schapiro, chairwoman of the S.E.C., has said that considering new rules restricting short-selling is a priority. Members of Congress like Barney Frank, the Massachusetts Democrat who heads the House financial services committee, are calling for quick action.
For the moment, the most likely outcome may be for the S.E.C. to reinstate a rule that the commission itself abolished with a unanimous vote in 2007, under its previous chairman, Christopher S. Cox. Known as the uptick rule, it would bar investors from shorting a stock until its price ticks at least a penny above its previous trading price.
But current and former S.E.C. staff members appear to doubt that reinstating the uptick rule would have much of an effect on trading. Some say the change would be merely cosmetic.
“The government wants a confidence measure right now, and that’s all this is,” said Lawrence E. Harris, a former S.E.C. chief economist.
Traders, he said, will simply find ways to circumvent the rule, but the commission probably will make the move if only to deflect outside pressure.
“Every crisis requires action,” he said. “It’s not worth fighting over.”
In March, Mr. Frank urged Ms. Schapiro to reinstate the uptick rule. That same month, Senator Edward E. Kaufman, Democrat of Delaware, introduced a bipartisan bill to reinstate the rule, saying its demise in 2007 “added fuel to the fire of distressed stocks and markets.”
But a more radical solution — a so-called circuit breaker that would halt trading in a stock for an entire day if its price fell by a certain percentage — appears to be off the table.
The S.E.C. first enacted the uptick rule during the Depression, after the market crashed in 1937-38. It then voted to repeal the rule in mid-2007, after internal studies showed that removing the restrictions would not have a “deleterious impact on market quality or liquidity.”
To some, the issue is clear-cut. The American Bankers Association, a trade group representing the vast majority of American banks — whose equity values have been especially battered in the last 18 months — recently submitted an opinion in favor of reinstating the short-sale restrictions.
Sally Miller, a spokesman for the A.B.A., said the member banks thought there was a clear link between the market turmoil and the rule change.
“All of a sudden subsequent to 2007 they can see all their stocks going haywire,” Ms. Miller said. “It’s cause and effect.”
Traders and fund managers, however, say the rule is a part of a broader opposition to short-selling, a tool investors need to bring overvalued stocks back into line. Short-sales, they say, are a frequent scapegoat for companies of exaggerated fundamental strength. Others say that the rule will have little meaningful impact. “I don’t mind what I see as minor inconveniences,” said Whitney Tilson, an author and managing partner of T2 Partners, “if it will get rid of the critics who like to blame short-sellers every time a stock goes down.”
Duncan Niederauer, the chief of NYSE Euronext, which runs the New York Stock Exchange, said in March that while “there was no economic benefit” from having the uptick rule, “it would go a long way to adding confidence.”
The exchange has since officially voiced its support. Joseph M. Mecane, the chief administrative officer for United States markets at the NYSE, said that the exchange was not trying to curb traders’ ability to sell short but was wary of the “kind of herd mentality” that gripped the markets during the few most staggering days of the fourth quarter last year.
“You want some sort of a dampener in those periods,” Mr. Mecane said, “and let the stock breathe a bit.”