Holding Sirius Stock: An Exercise in Humility

By Steve Garcia

If you follow Sirius XM (SIRI) stock or are a subscriber to XM or Sirius and are also a stockholder, then you know the pain I and many others have felt over the course of the past several years. To say it has been a dangerous journey up a steep and slippery slope is to understate the events we as shareholders have had to endure and dig through to get to the root of the situation. The crux of the problem is that many people who have bought and loved the service, also jumped into the financial markets and bought stock of the companies, either before or after the merger, with visions of the stock paying off in a big way at the end of their particular dream. That may well be the final intended act of this stock, but to date, this has been an educational exercise in futility and humility of immense proportions.

So many people have already lost so much with this company…..and as much as I feel for them, I also applaud those who have stuck it out. For as the old saying goes, “nothing good comes easy,” and there is a price to pay for everything. The common shareholders are a front line example of that. There were several missteps along the way, the merger and all its delays come to mind. Many of us watched helplessly, thinking as the stock price dropped……that somehow it was a mistake…and it would all be fixed within a few months. This is an especially difficult thing to say for those who still don’t understand, but there is no quick fix.

Those of you who think this stock is going to magically return to pre-merger prices, or even post-merger prices of last year, are surely in a game you don’t belong in. The news of this past February that ensured Sirius XM would live on and more recent re-financing news seem to ensure the survival of Sirius XM at least through 2012 and yet probably still brings little indication of where the stock is headed.

Kaufman Bros. wrote in a report several months ago that while the Sirius platform is highly specialized, the more generic XM satellites could be used for other services, such as capacity to expand high-definition satellite TV offerings or “even a competitive satellite broadband offering for rural customers.” Could this be why we see no devices to compare with the Grace wireless radio and the Tivoli satellite radio for XM? Is this part of the future plan for the XM side of the company?

Keep in mind that last year Charles Ergen paid $700 million for wireless spectrum that could be used for mobile video services and, before that, paid $380 million to buy Sling Media, which produces equipment enabling viewers to watch their home TV from remote location. Ergen was looking to buy Sirius XM for a strategic reason and this just might be part of a plan yet to be revealed. Regardless of the reality of these reports and Ergen’s attempted takeover play, one has to believe that things are on the upswing as better news continues to trickle out, even with the horrible state of the economy.

Of course I can also say that if anything is true, it is that Sirius XM shareholder blogs are where you will find passion, concern, intelligence and focus on something we all seem blinded by; Sirius XM Radio and its issues that need fixing for the strength and ultimate survival of the company. The release of the iPhone application and the recent 500 plus million dollar debt offering which was mostly refinancing and whose notes were in high demand was a step in the right direction.

The majority of Sirius XM debt is now pushed out to 2013 and 2014, giving the company even more breathing room. There appears to be much smoother sailing on the immediate horizon, though recent stock action suggests the waters are still quite murky. We can only hope that the powers that be have had the foresight to think over the horizon, as they battled to make it out of the latest storm intact.

The 2014 debt associated with lent common stock shares for shorting purposes now needs to be addressed going forward. The second quarter conference call is less than a couple of weeks away. While auto sector numbers were not stellar for the second quarter, the company did try to mitigate the situation by ramping up several pre-owned auto programs that included free trial periods with the purchase of the vehicle, much the same as many of the new car programs. Will these programs, in addition to the iPhone app, give us a reprieve on subscriber numbers? More likely no than yes, though the negatives may be much smaller than some current thought suggests.

As a shareholder, I am hoping for the best on that front, but preparing for the worst.

Position: Long SIRIUS

Comments

[relmar2003:]

Try this out for a chance. Actually defend the content of your posts, without doing it by reposting by copy and pasting old posts. Hows that for adding to your cleverness. LOL
So lame. Your getting boring.

Jul 27 08:54 AM

[drevil6406:]

SIRI -Doom,

You continue to lie and deceive.....but you can't win. I wrote the article. People like relmar and myself will continue to catch you lieing...and call you out every last time. You tend to not respond when you get hit with facts...and then claim that people have multiple identities if they oppose you. A bigger lie was never told! I am this screen name here...only because my original screen name was flagged when I got too angry over the moron mentality that you and those you represent were trying to embed here. I am asm610 @satwaves...and only hope you will take Newman's challenge at some point...as I enjoy shooting down lies with facts!

Jul 27 08:56 AM

[sl62:]

siridoom...

I believe I have told you this before but...

>>SIRI stock is rigged with a Goldman Sacks Computer in control. People talk about "THE SHORTS". They do not understand it is a GS hedge that Mel issued to guarantee the GS loan. Mel rigged SIRI with GS the day of the merge<<

This is incorrect. If you reference the 7/30 525b4, you will see that GS is not involved with the merger financing per se and therefore not connected to that hedge. The two IB's connected with that XM 550M deal are Stanley and UBS. GS's convertible from 2004 was the Feb '09 Note maturity that nearly bankrupted SIRI. But that was hedged in years gone by and as we know, they no longer even held the debt at the end.

Now. Having said that...I won't disgree with you that GS remains active in SIRI trading. Even though it is confirmed through mffais that they have a substantial long holding still in SIRI, they also know the resistance levels the SP currently faces esp through Dec of 2009. We know from their recent earnings report that GS's trading business was their most profitable in Q2..so it's safe for me to assume that they have been playing SIRI both ways..knowing their long position will pay off in due time..of which they have plenty. But..when you're quoting facts on the current 2014 XM ugly deal hedge that was created to close the merger, you are mis-speaking to say it is GS that is behind it. If as you say this board is a joke because of innacurate facts, you need to also be correct on yours.


On Jul 27 06:03 AM SIRI-Doom wrote:

> Great question:
> Would you pay even 1 penny to let someone rob you of $1? No. So why
> would you invest in a failing company.
>
> I agree. For me, it is pride. That gangster CEO, Mel KarmaCrook duped
> all the pre-merger longs and I am getting some back 3 cents at a
> time.
>
> SIRI stock is rigged with a Goldman Sacks Computer in control. People
> talk about "THE SHORTS". They do not understand it is a GS hedge
> that Mel issued to guarantee the GS loan. Mel rigged SIRI with GS
> the day of the merger.
>
> They Milk people who refuse to belive reality. But not me. I have
> worked that computer for 11 months to recover from that theif. <br/>

Jul 27 09:01 AM

[Neal Barkett:]

If we look at this stock from a realistic view, it basicly comes down to where are they compared to other stocks when this economy turns around. They like most other companies have cut a lot of the fat off of expenses , especially since the merger has been completed (that was the idea of the merger). They are also trying to work on other revenue streams besides the auto industry. They were at a point close to death and given thru the media there last rights on a daily basis. It was a wake up call that though so very painfull for all involved that gave them a "coming to Jesus experiance". Not a good thing in the short run but no doubt they have been forced at how they were doing business and opened up their minds (Malones input doesn't hurt either). So say what you will this company with there streamlining and there Great headway into the % of cars w' factory installed Sat radios they are poised to be one of the front runners when this economy turns around. The only major concern is the economy must turn around in the next couple of years or the storm clouds will start forming again. My non- professional guess if a decent economic turn around would occur in the next year I wold think the stock price would be @ $3.00-$3.50 by the end of 2011. Long & Strong SIRI

Jul 27 09:06 AM

[Neal Barkett:]

But as always, I would like to see the mounting millions off idle Sat radios used in some way shape or form to promote themselves @ the least.

Jul 27 09:10 AM

[sl62:]

siridoom...

that of course would be the form 7/30 424b5...it's early. Happy reading....


On Jul 27 09:01 AM sl62 wrote:

> siridoom...
>
> I believe I have told you this before but...

Jul 27 09:14 AM

[Neal Barkett:]

Oh by the way, if the day comes when Mel mentions a strategic well thought out plan on utilizing the idle radios, I guarantee a big rise in the stock within 24 hours of such an announcement.

Jul 27 09:15 AM

[drevil6406:]

dividendmac,
I definitely agree that saying newsmax.com is an insignificant website was a silly comment.

Jul 27 09:28 AM

[sl62:]

Neal B..

Haven't seen you in a while..hope all is well. Good post as usual. I think where the SP is concerned, there a just a few hurdles left in the short-term. Including squaring away the remaining Sept and Dec '09 debt and then of course hopefully dealing with the 2014 550M convertible financing that carries a 1.875 conversion price. If that is left in place of course this SP would get no higher and stay below that range, pre-reverse. But as you say, overall the future of this company looks very bright. 2010 should be when we see more upward movement in the stock..at least getting back over a buck thus washing out the NASD minimum bid non-compliance violation that will be issued as of 9/3 (assuming the state off things remains equal). And of course as you say by 2011...the picture will just look so much different.


On Jul 27 09:06 AM Neal Barkett wrote:

> If we look at this stock from a realistic view, it basicly comes
> down to where are they compared to other stocks when this economy
> turns around. They like most other companies have cut a lot of the
> fat off of expenses , especially since the merger has been completed
> (that was the idea of the merger). They are also trying to work on
> other revenue streams besides the auto industry. They were at a point
> close to death and given thru the media there last rights on a daily
> basis. It was a wake up call that though so very painfull for all
> involved that gave them a "coming to Jesus experiance". Not a good
> thing in the short run but no doubt they have been forced at how
> they were doing business and opened up their minds (Malones input
> doesn't hurt either). So say what you will this company with there
> streamlining and there Great headway into the % of cars w' factory
> installed Sat radios they are poised to be one of the front runners
> when this economy turns around. The only major concern is the economy
> must turn around in the next couple of years or the storm clouds
> will start forming again. My non- professional guess if a decent
> economic turn around would occur in the next year I wold think the
> stock price would be @ $3.00-$3.50 by the end of 2011. Long &amp;
> Strong SIRI

Jul 27 09:29 AM

[sl62:]

one last thing..and a pet peeve of mine for the sake of accuracy. As was pointed out, there are two kinds of splits. One, a forward split, where the sharehoder receives more shares to their existing 1..and which is denoted by the larger shares listed before the one base share (2:1). Or a reverse split where the shareholder winds up with less shares but equivalent total shareholder value due to a higher compensatory price per share..and which is denoted by the share divisor listed after the one base share (1:10). My meaning here is when you write 10:1, though you mean to refer to a reverse, you are actually writing a forward split where the shareholder will receive 10 new shares for every one they own. And in the case of a reverse, this would not be accurate. Not ragging on anyone, just saying.

Jul 27 09:43 AM

[frugalandpu...:]

You should learn to invest before you start writing publicly. It's embarrassing. Only amateurs hold their stocks to the bitter end like this. You missed a ton of other opportunities waiting to "break even" on this dead position. You aren't going to break even. Move on with your life, and your portfolio. That is what real investors do. Tough love, sorry.

Jul 27 10:12 AM

[relmar2003:]

frgualandpu...
You want us to sell now? Where was this advice when it was at $3.30? Didnt see you around. Now you want them to sell. Nows the time to buy silly. Your confused. I'll excuse it, as its a Monday. Probably havent had your cocoa puffs yet.

Jul 27 11:35 AM

[SIRI-Doom:]

SIRI is NOT dead. It is just a very corrupt stock.

SIRI, a government holding company for central control of Satellite spectrum.

SIRI, Managed by Goldman Sacks with a license to steal issued by the US Treasury and the Fed.

Play the 3 cent spread and gamble to beat the computer... It works...

Jul 27 04:09 PM

[R A F:]

Sandra - This is excellent news. Many thanks for your fine work an substantial efforts in this regard. There is no doubt that SIRI has been seriously impacted by abusive short selling and any moves to restrain these practices can only be viewed as a positive development for investors. I gather from the cbsnews link, above, that the SEC is also considering additional moves in the future - possibly re instating the uptick rule, etc. - all of which would serve to reinforce the perception that shorting will become more restrained and regulated. I would also believe that the SEC is considering ways to restrain "flash trading" by high speed computers, which effectively permit front running by a handful of powerful dealers, to the detriment of market integrity. The possibility that these moves by the SEC might be enacted should increase the nervousness of shorts at present - as it should become harder to cover positions in the absence of future abusive shorting in the future. I notice that daily volume has already fallen over the past few days, since the publication by the N Y Times brought attention to the manipulative capabilities of "flash trading" by superfast computers.

Jul 27 04:36 PM

[jmsithy:]

what was the count today though shouldnt this of dropped today if it was doing the 3 cent spread


On Jul 27 04:09 PM SIRI-Doom wrote:

> SIRI is NOT dead. It is just a very corrupt stock.
>
> SIRI, a government holding company for central control of Satellite
> spectrum.
>
> SIRI, Managed by Goldman Sacks with a license to steal issued by
> the US Treasury and the Fed.
>
> Play the 3 cent spread and gamble to beat the computer... It works...

Jul 27 06:58 PM

[drevil6406:]

You should learn to keep your mouth shut if you have nothing constructive to say. What type of moron would say that.....do you realize that SIRIUS XM is a different company than SIRIUS as a stand alone...or XM on its own. It is you who are clueless....I invest...you obviously trade! You apparently have no clue how to invest!


On Jul 27 10:12 AM frugalandpuzzled wrote:

> You should learn to invest before you start writing publicly. It's
> embarrassing. Only amateurs hold their stocks to the bitter end like
> this. You missed a ton of other opportunities waiting to "break even"
> on this dead position. You aren't going to break even. Move on with
> your life, and your portfolio. That is what real investors do. Tough
> love, sorry.

Jul 27 08:07 PM

[J Stew:]

You fools miss the point. No one wants to pay for radio when IPODs, CDs, and radio are much cheaper; the people who do pay are fools. The company can't make money when Apple I-Phones offer a plug-in service or when AM and FM channels offer current, up-to-date media. The best chance this company has is to develope new technology and to sell it.

Jul 28 01:39 PM

[Vegas Vic:]

I haven't lost anything.

Bought for $3 and sold for $6 for years.

Lately I bought @ 10¢ and sold @ 40¢

Sirius hasn't made me rich but it has paid off over $100,000.
I expect it to make me another $100,000 or more in the next year.

Jul 28 02:21 PM

[J Stew:]

Traders do not apply to my statement.

You fools miss the point. No one wants to pay for sat. radio when IPODs, CDs, and radio are much cheaper; the people who do pay are morons. The company can't make money when Apple I-Phones offer a plug-in service or when AM and FM channels offer current, up-to-date media. The best chance this company has is to develope new technology and to sell it.

Jul 28 02:27 PM

[*Newman*:]

J. Stew: Satellite Radio may not be for everyone, but over 15 million selfpaying subscribers would disagree with you.

I cannot listen to uncensored comedy anywhere else but SatRad, and perhaps an iPod.

I cannot listen to ESPN radio anywhere else, 24/7.

I cannot listen to Howard Stern or Opie and Anthony or Bubba the Love Sponge anywhere else.

I cannot listen to a single AM/FM radio station as I drive accross the state of Texas. I cannot get live content on my iPod. Music on an iPod costs money (unless you are breaking the law. You wouldn't do that, now would you?). AM/FM wastes 20 minutes of my life every hour by bombarding me with commercials.

Every service has its pros and cons. For me, Sirius XM pros outweigh the cons. Yes, I have an iPod and an iPhone, and a CD player for that matter, and I listen to all of them. (NEVER listen to AM/FM if I can avoid it at all). But Sirius XM gets my vote as the best, and it gets my subscriber dollar.

If it is not for you, that is fine. But why do you come here and comment on this company if it has a dying business model? I sense alterior motives.

I challenge ALL of you to come to www.satwaves.com for intellegant discussion. SIRI Doom: I have offered, and will continue to offer. Come to Satwaves. Email me. I will set you up. You will be uncensored. Post some facts to back up your claims and we will leave you alone. Until then, you are basher with an agenda. You run when confronted with facts. You change the subject and never address the facts you are presented with. You make acusations against people like Relmar having multiple IDs that he uses to discredit you. You have stated that Relmar and myself are paid by Sirius XM to post here. You have even suggested that Sirius XM has Seeking Alpha is paid by Sirius XM to delete your comments! Come on dude...

Jul 30 01:25 AM