SIRIously Positive Quarterly Auto Sales

By Brandon Matthews

The results are in and despite the market’s focus on horrible September auto sales data or its year over year comparisons, the results for Q3 are exceptional from a Satellite Radio perspective. Looking at the overall numbers, clearly Sirius XM Radio (SIRI) is on track to report better than expected subscriber numbers when it announces its quarterly results next month. Below is a breakdown of 2009 annual auto sales and the numbers not being reported anywhere else indicate that for the first time this year, the 3 million vehicle mark has been broken. This is the second sequential rise in quarterly auto sales since the bottom was hit in the first quarter of this year.

A first look at the numbers reveal that the Sirius XM partners that offer the highest installation rates such as Hyundai (HYMLF.PK) and Kia of 100%, reported a rise in sales not only for September but for the quarter as a whole.

A basic overview of the numbers reveals that in Q1 and based on 2.2 million vehicles sold, Sirius XM lost 400,000 subscribers. In Q2, auto sales increased by 400,000 vehicles, and Sirius XM reported a lower loss of 185,000. If basic math holds true, the addition of over 400,000 more new car sales should put Sirius XM subscribers in the black for Q3.

Ford (F) and Chrysler which pay for 1 year subscriptions at the time of production on behalf of their customers have both announced increases in production beginning in September which can only add to the total of expected subscribers.

Combining this data with an expected increase in subscribers resulting from Certified Preowned Programs instituted this year, increased penetration rates and new product placements such as the Toyota (TM) Camry, only a Fool could assume that Sirius XM Radio will report anything but positive subscriber growth for the quarter.

I have yet to crunch the numbers in depth and will report on those findings in the coming week, however I feel confident that the company will report 150,000 or more net subscriber additions for Q3 based on the initial data.

Position: Long SIRI

Comments

[R A F:]

Whenever things look like the markets are properly interpreting favorable developments for SIRI, you can be sure that SIRI-Doom will run up the red flag of the possibility of a reverse split sometime in the future. Although this is unlikely, due to the amount of time (not before March 2010, at the earliest, and more likely six months beyond that due to probable extensions of the 1.00 minimum price requirement) the fears of a reverse split are greatly overblown. The true facts are: In many cases reverse splits actually lead to enhanced share price performance. Two examples follow:
Priceline had a reverse split of 1 for 6 shares in June of '03 when the original price was 2.75 (as of 5/1/03 when the reverse split was announced). The stock, on an adjusted basis was worth 18.84 as of 5/2 and traded at 25.22 on 6/16/03; 31.76 on 8/1/03; and is today at 163.08.
Another example - just last week: Finisar (FNSR) had a reverse split of 1 for 8, effective 9/25/09. Prior to the split, the stock had traded at these levels: 9/3 .8419; 9/8 .926; Reverse split was announced 9/10 Stock traded 9/15 at .9002; 9/21 at 1.0799; 9/25 at 1.23. The reverse split adjusted price on 9/25 was 9.84 (temporary new symbol FNSRD). The new stock has traded as follows: 9/25 9.44 to 10.56; 9/29 9.79 to 10.44; 9/30 9.06 to 10.25. The stock closed 10/2 at 9.21, following the general selloff in all markets - 9.21 equates to a pre reverse split level of 1.15. The highs following the reverse split 10.25 to 10.56 equate to pre split levels of 1.28 to 1.32. Keep in mind - just before the reverse split was announced (9/3 to 9/8) the stock was trading from .8419 to .926). So - You can see through these vivid examples - fears of the fallout from a reverse split are greatly overblown - and are now being used by the "bashers" to try to exert undue pressure on SIRI.

Oct 04 01:54 PM

[SIRI-Doom:]

Short Selling and Flash Trading SIRI is very manipulated
Call me a pessimist nut case.

I have tracked SIRI flash (hi speed computer) manipulation and even found a way to mostly beat the flash trading computers with a 3 cent spread. There is a human interruption factor in the computer algorithm that reduces the success to 64 percent. They use 3 base cycles, rise, float, sink. SIRI spends a great deal of time in float as it trading 3 to 25 shares with gains of 0.0001 to 0.0006 cents. You can see this if you have access to a full flat feed of 3 data (Not a block feed as Etrade provides).

Besides manipulation, the big trading houses are using flash to remove your cream from every trade. The cream is when you sell for 50 cents and the trading house holds your trade until they have a block. They make the trade in a block at 505 cents. They pay you 50 cents and they take the .005 on every share.

The trading houses have control of the market and lobby control of Congress. They make money on all sides. Not a single law has been enacted or restored to stop this unfairness. The SEC knows all about it and refuses to do anything. The big bankers get top pay and bonuses just to keep quiet about it.

Your TARP tax money is being used to pump the stock market. The computers and the shorts will not stop because these are the tools keeping the market in a float and rise cycle with TARP money. Why should it stop? They make the laws and the money.

Anyone mad about it? Elect the next politician you see plastered on TV day and night. Big money put them on that TV and they got that big money from trading houses and banks. They even control you…

Oct 04 02:18 PM

[SIRI-Doom:]

What to do about the manipulation?

I heard a good idea last night. Slow down Computer Flash Trading by putting a tax on every market transaction. I am no fan of taxes. But, it cost the trading houses zero to run that computer all day. Add a tax for each transaction and they will shut that computer off.

Oh wow, they could use that transaction tax to end the healthcare problem. How about add this to your letter to the SEC…

AS FOR SHORTS
Get SIRI to pay back and get the Goldman Sachs lean shares from the original merger loan. That alone would make Goldman Sachs close 60M shares they hold short against SIRI for the loan security hedge.

Restore the uptic rule. But, the uptic rule alone no longer has much effect unless you can stop the high speed computer Flash trading.

Oct 04 02:33 PM

[User 473272:]

I personally believe the best is certainly yet to come. In fact on last Friday morning I increased my position by half in SIRI @ .57 and now have an average total position @ .36

Let the good times roll. Nice article and analytics Brandon and R A F.

Long SIRI

Oct 04 02:35 PM

[Big PJ:]

SIRI-Doom, thanks for the explanations. While bashing this stock a lot, you do increase our awareness often on topics such as manipulation.

Sit out the coming rise -- you can, but I'm going to enjoy this one. We won't need a reverse split.

Oct 04 03:03 PM

[SIRI-Doom:]

I also think SIRI is going to rise on this 3q report. I just don't think this report alone will take SIRI to a dollar and hold the dollar for the 10 consecutive days needed to be Nasdaq compliant again.

I see SIRI using the good news of this 3q to reduce the slide of the rev-split run down. It is just like Mel to muck up good news. This is why I am adamit about sitting this out.

It cost me nothing to be wrong. So, I am wishing for you that SIRI does rise... Good luck...


On Oct 04 03:03 PM Big PJ wrote:

> SIRI-Doom, thanks for the explanations. While bashing this stock
> a lot, you do increase our awareness often on topics such as manipulation.
>
>
> Sit out the coming rise -- you can, but I'm going to enjoy this one.
> We won't need a reverse split.

Oct 04 03:40 PM

[Big PJ:]

So when do you think the reverse split will happen? How bad will we lose on dilution?

Oct 04 07:17 PM

[dimola bros...:]

siri is a serious company like the rubbish removal trash hauler nyc dimola bros said 1 dollar by year end thinks looking up

Oct 04 09:10 PM

[Mike Schugt:]

Brandon, question for you. What do you think the net revuenue lift would be on an annulaized basis by the charging of the Royalty fees?
With 18 million subscribers and growing, wouldn't this amount to nearly $400 mil K? in total top line rev increases in of itself? Yes they must give a certain percentage back to the music industry but I am curious if anyone knows how much of it they actually must give back. This seems to me like a huge incremental revenue boost.

Oct 05 07:35 AM

[Jerrold Wil...:]

Great!!! sit out until after the reverse split....Also, sit out of this blog too!!! Then come back after 50-1 rev split....GREAT PLAN....


On Oct 04 01:22 PM SIRI-Doom wrote:

> Rules rules rules for risk
>
> The big institutions have rules for risk and so should retail investors.
> Most institutions can not trade stocks with SP under 5.00 a share.
> Well, the SP does not stop me from investing.
>
> However, if you have ever held a stock that is going through a rev-split,
> you will never do it again. Today, or next year does not matter when
> your CEO has need and anytime permission to rev-split. SIRI is off
> limits for me until the rev-split is over.
>
> Some good money could be made on the spread building on the SIRI
> 3q report. It makes me mad to be sitting this out because Mel will
> not get this done and start rebuilding on this expected good 3q report.
> To late for that now…

Oct 05 08:52 AM

[Jerrold Wil...:]

I'm a little confused about how SIRIUS XM calculated the "music royalty fee". If PANDORA, i believe will only charge $1.00 to its "heavy users" How did SIRUIS XM calculate that each subscriber should pay $1.85...or a $.99 for addititional devices on account? We already pay $12.95 and up... They agreed to not raise prices for 3 years...but it seems they have the right to add increases and just put "titles" on the increase and call it a fee. I am a subscriber and not complaining, but...I would hate to see them get the FCC upset at them for breaking promises. Also, Mel Karmazin during merger hearings repeatedly said how they would add A La Carte options to help customers save money. Now, a year later...All that is available is the Stratus 5 and upcoming STRATUS 6? Their engineers can't figure out a way to make all radios A la carte? Or, why arent all new devices..ie SKYDOCK...not made to support A La Carte...I find it hard to believe that the iphone/ipod touch wasnt able to be designed to support A la Carte services.....Being Greedy for a high ARPU is very dangerous, especially in touch economic times...If they are smart...they will promote the STRATUS 6 as much as the overpriced SKYDOCK....More people want an affordable alternative than a +$350.00 satelite radio....which is what a Ipod touch with SKY DOCK will be.....(skydock + iphone/ipod touch).
I still cant understand how this SKYDOCK at $119.00 is a good deal for ipod/iphone users....If they want SIRIUS XM, they could buy a stand alone dock and play for less and get more features and probably a neater installation....We will see...

Oct 05 09:11 AM

[Bubba B:]

I was in a card joint the other day and one of the "wise guys" was mother F#@king radio stations. He said he could not take regular radio anymore and had that pay radio put in his ride. " I don't give a F#$K what it cost" he said. Honestly I don't think he even knew the name until I said it (XM). Now if people like that are subscribing we should be in GOOD shape over the long haul.

Oct 05 01:49 PM

[jmsithy:]

The Reverse Split will happen after the 3rd QTR Report need to drive this up first and the 3rd QTR report will be a good oppertunity to mention the reverse split if it happens (Mel loves to give good news during the reports why do you think this stock does not go anywhere after the reports but down and why this is so undervalued


On Oct 04 07:17 PM Big PJ wrote:

> So when do you think the reverse split will happen? How bad will
> we lose on dilution?

Oct 05 07:07 PM

[jmsithy:]

FYI you wont know when a reverse split will happen until it does oh look I have 20k shares at .70 / Next day dam its at 5.00 must have really rised after the 3rd QTR, but you look at your account only 400 shares oh dam the stock is falling wonder why?? 5.00,4.50,4.00,3.50,2.... / look at it this way you went from having 20k at .70 then 400 at .50


lol


On Oct 04 03:03 PM Big PJ wrote:

> SIRI-Doom, thanks for the explanations. While bashing this stock
> a lot, you do increase our awareness often on topics such as manipulation.
>
>
> Sit out the coming rise -- you can, but I'm going to enjoy this one.
> We won't need a reverse split.

Oct 05 07:14 PM

[R A F:]

jmsithy and SIRI-Doom appear to be one in the same - spewing the same misinformation and "fear mongering" - using allegations totally devoid of fact. For any persons worried about the effects of reverse splits - please see my previous comments, above - regarding the actual performance of Priceline and Finisar, which both rallied through - and after - reverse splits were enacted, to the benefit of their shareholders. A reverse split for SIRI still appears highly unlikely over any intermediate term horizon, so all of the "fear mongering" comments of these two "bashers" should be totally discounted. DOOM's comments about Mel's option grant are equally ridiculous - all designed to instill fear and mistrust among the naive.

Oct 05 07:44 PM

[jmsithy:]

I never bashed the stock or put it down / How come is it anything that is not positive about the stock is not welcome here / what is everyone so afraid of

Oct 05 08:03 PM

[Chris Brade...:]

As phenomenal a product as satellite radio is, I've followed SIRI since it hit .05, and I think while it has done a remarkable job of weathering the storm, particularly building it's relationship to Apple's iPhone and iPod consumer base and technology and technology design revolution well into the immediate future, it hasn't learned to market itself as a company through advertising enough. I believe that in the not too distant future global satellite radio access will be as fundamental as television has become to developed nations with modern economies. The merger came at a tough time going into a global recession of potentially epic proportions had the banking and credit system not been shored up radically and expeditiously by the Federal Reserve. While the debt load requires restructuring in the long run, Sirius XM is the the only satellite company standing coming out of this storm, and while Wall Street requires relatively stable earnings and sales growth to support equity investment, it's phenomenal that SIRI's subscription losses in Q1 and Q2 were as minimal as they were during a brutal, historically protracted recession that impacted the auto industry as severely as it did (including Chrysler and GM bankruptcies).
To hold over 18,000,000 subscribers of 19,000,000 is a testament that ultimately access to the advanced programming through satellite technology regardless of where you are in the country is a testament that people trying to understand this companies' service need to stop thinking of it as discretionary spending but as something critical to people who want continuity in their access to the programming important to their lives. In the past, we used to think of short-wave radios as our access to information in case of emergencies or in relation to accessing news and events related to other parts of the world versus the local perception of FM/AM technology (not to mention huge reception problems while on the move or depending on antenna technology). SIRI has become that but with regular, immediate access. Coming out of this recession, regardless of different arguments regarding the shape or time-frame of the recovery, with a leaner, more technologically-current auto industry, and with all three of the "New Three" manufacturing again, with a slowly re-loading American consumer base investing in the next generation of cars, it's revenue will continue to turn the corner, and it's debt will only be seen in the context of the merger going into the recession, and it will be a justified necessity as it launches forward. Will SIRI ultimately be merged with Worldspace?Possibly, but I believe in the near future for a car NOT to have SIRI satellite technology will be like someone CHOOSING not to have a computer or email. There will always be old-schoolers, but a high majority will have SIRI in the not-too-distant future. To have seen this stock at .05 will be one of the great Wall Street legendary stories in the future.As I said, the technology is here. It's cutting edge. It's diverse, informational, and cultural. It's brought radio full circle -from the periphery (thanks to television originally) back into the fabric of what's relevant everyday in our culture and what is collective. It's one more critical medium through which all of that is communicated. It's clear that Sirius XM understands the value of strong marketing with companies like Apple and top car companies beyond the American companies( i.e., Mercedes and Audi ), but it's time that Sirius XM connect to the marketplace, whether it be the business and economic culture of Wall Street and investors, or whether it be consumers. It needs to translate what it is, and it needs to do a better job of exposing the company to the market through advertising BEYOND programming promos to listeners who already have Sirius XM in their cars. In the hyper-age of over-exposure to advertising, Sirius XM needs to commit itself to cutting-edge marketing and ad campaigning as to me it seems invisible outside of the world of consumers who've already committed to it. It should take Apple's lead. SIRI has a market cap of 2.6 B at.60! It's advertising is missing.Lastly, while it is a hugely promising company with a huge equity value potential in the near-term as well as long-term, it did come close to the abyss this winter, and it's CEO and management team need to be proactive in combating the short-positioning sabotage that's taken place in relation to its stock value. The market and investors react and commit in ANTICIPATION of what's to come - more information and more promising releases directly from the company would be valuable to the companies' philosophy and optimism regarding the future of its technology, programming, partner relationships, business vision, let alone regular adjustments in its outlook regarding revenue, sales, and debt-load restructuring strategy. The company has everything going for it now that its pulling away from this winter and the merger. It deserves to defend itself and promote itself more through what's been mentioned here. I hope it will. It's a company and technology that not going away. It will be like early radio, television, and the computer - part of the everyday, technological fabric of the contemporary modern world. Thanks.

Oct 05 09:07 PM

[R A F:]

Excellent summary, Chris Brade. All that you state is true - great product and potential and now the company needs to more proactively promote and defend itself.

Oct 05 09:31 PM

[LocoMotion:]

Currently presenting at an investor conference, Sirius XM's (Nasdaq: SIRI) Mel Karmazin, CEO of the satellite-radio provider, said that the company has "no plans right now" to do a reverse stock split. With shares of Sirius languishing under a dollar for the last year, a reverse split has been one of the most-heard rumors on the Street related to Sirius.

Karmazin also told the audience that performance over the last few months has been helped by the "Cash for Clunkers" program. Over the course, shares of Sirius surged more than 40% from around $0.42 on July 27 to near $0.60 today. Good call, Mel.

Turning more toward future plans, Sirius' Karmazin said that the company is considering activating what he called "idle radios" for promotions and also said they are looking at offering a traffic information service.

After opening about flat from yesterday's open, shares of Sirius are currently up about 2.7%, possibly on the Karmazin comments.


On Oct 05 07:07 PM jmsithy wrote:

> The Reverse Split will happen after the 3rd QTR Report need to drive
> this up first and the 3rd QTR report will be a good oppertunity t
> mention the reverse split if it happens (Mel loves to give good news
> during the reports why do you think this stock does not go anywhere
> after the reports but down and why this is so undervalued

Oct 19 10:19 PM

[LocoMotion:]

Also wanted to add that this is a blog fI found at SteerInsider.com

Oct 19 10:24 PM