Sirius XM (NASDAQ:SIRI) held its annual meeting for shareholders Tuesday morning. The company's CEO Mel Karmazin turned in an underwhelming performance, helping SIRI stock perform like it often does.
(Courtesy of Yahoo! Finance)
Gap up at the open. Retail suckers and SIRI permabulls buy the head fake. Day traders short the top, take an early lunch and call it a day. It has become a classic pattern. Now, we're just left to wonder how low SIRI can go.
With Karmazin in charge, there is no floor on this thing.
The CEO's slide presentation at the shareholders' meeting should scare the living snot out of you if you're long. Howard Stern should have sent an intern in to interrupt the proceedings with cries of Baba Booey!
First, Mel did something he does so very well. He reiterated the same meaningless quantitative minutia we already know. Yes, Mel is a master at generating free cash flow. He has so much of it he can think of nothing to do with it other than pay a dividend or execute a buyback.
At the same time, Karmazin tells shareholders that a top priority of management is to "continue to innovate." He really has to be kidding us. His idea of innovation: on-demand programming and personalized radio. The former has been around longer than my eight-year old has, while the latter represents little more than a blatant rip-off of the supposedly inferior Pandora (NYSE:P).
I want to be held accountable ... I don't want to be responsible for somebody else making a decision ...
If John Malone or anyone else wants to but that stock, there's nothing we can do ... But I don't want them to get control of the company that way without paying a premium.
This sounds like a CEO standing up for his shareholders. In my view, it's actually the case of an executive who is set for life playing chicken with a company's future.
I have followed Mel's career for quite some time. For about 30 years to be exact. When I was young and dreaming of a life working in radio, I idolized the man. And for good reason.
Ask Howard Stern, while a sales guy at heart, Mel never allowed the bottom line to thwart a talent's creative freedom. He stood up for great personalities like Stern and let them do the things that make them great, even if it angered advertisers. Of course, those days were gone, but, along with being a great businessman, that's a major reason why Karmazin commanded so much respect over the years.
But, the world has changed. Pandora disrupted radio and a whole host of developments in the broad new media space changed the game. Businessmen do seemingly incredible things in the near-term; entrepreneurs and truly innovative minds lead companies into lucrative and sustainable long-term futures.
Mel is smart enough to realize that Sirius XM needs to take the next step. And it needs to take it soon. Unfortunately for shareholders, his ego will not allow him to cede control and let a company with an incredibly powerful cross-platform stable of assets do what needs to be done.
Disclosure: I am long P.