Significant Value in Combined Siri/XM from Merger Synergies - Citi 57 comments
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Citi analyst Tony Wible, upon seeing the preliminary Sirius (SIRI) results, sees merger synergies as realizable. While the finalized Sirius numbers are not public yet, the early glimpse issued by the company was enough for Wible to maintain a BUY rating and a $6.50 price target on Sirius.
Wible saw the 2Q08 Pre-announcement numbers as solid, noting, “Revenues of $283 mil (+25.0%) were ahead of our $277 mil (+22.3%) estimate.” Also better than the Citi estimates was the adjusted loss from operations, which came in at ($24) million and was better than Citi’s ($30) mil estimate. According to Wible, the better revenue numbers combined with in-line subs suggest ARPU was better than expected.
Wible noted that the subscriber picture was in line with his estimates, but OEM was a bit weaker than he anticipated, while retail was slightly stronger. SIRI ended the quarter with 8.92 million subscribers on gross subscriber additions of 1.03 million. While the gross number was better than Wibles estimate, the churn came in slightly higher, offsetting the net number slightly.
The Citi analyst also spoke of XM’s (XMSR) announced debt issuance, where the company will offer $550 mil in notes that are exchangeable into SIRI’s stock (likely 4-7% dilution). As part of the deal, SIRI will lend $350 mil in shares to the underwriters, which is solely to facilitate investor hedging transactions, given the inability of investors to borrow SIRI shares, and will not result in any cash to SIRI or share dilution. Overall, Wibble views this as positive and an innovative way to deal with a tough credit market. This method may help the company wrap up the few details needed to allow them to consummate the merger.
Wibble maintains a Buy Rating and a $6.50 price target because they see significant value to the combined company from the merger synergies, citing the strong Q2 results from both Sirius and XM.
The analyst will wait on merger deal closure and full Q2 financials prior to updating their model.
Tyler Savery Position - Long Sirius, XM
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not to mention the exclusive contracts with EVERY major sport.
Ever travel in a car with a laptop and Wifi/cell cards? Just curious.
On that note, I am back to not responding to you and your ridiculous comments.
I'll bet he'll look into the camera, shake his head, and say, "You should've sold last week and taken a profit off the table."
Like that was his suggestion all along!
I can't believe people listen to his nonsense.
By the way, there is one more thing: Aside from his changing position on Sirius which has created confusion in the minds of many, I still have not heard what it is that Mr. Cramer said that has so many people upset....
Scot's Slant
Scot's Slant
He bascially said Sat Radio was dead and to avoid it.
Well, oh well, there is one more thing: When I bought this stock, I figured I'd either make a few dollars or lose it all. And that's still my mind set today: With 19 million subscribers and others still signing on, I'm not tossing the towel into the ring-- Sirius may have bloodied my nose but it has yet to deliver the knockout blow ....
Scot's slant
And this leads to a question: If this company flops, than who will compensate Mel who has more dollars to lose than all of us combined?
One more thing: To be insulted (ie. gullible sports fan mentality), I do not seek. Helpful sound advice? Yum. Now that I'll gooble up quicker than a Dodger Stadium, foot- long Dodger Dog. And by the way, don't forget the mustard....
Scot's Slant
Financial advisors don't recommend stocks trading under $5 a share with negative earnings.
DocSlappy, that internet thing has been gone over and over again. If people dont get it by now they never will. They can join VicDave on the highway during rush hour, as they spent their 70th birthday in a car trying to get to work.
killerkaul, dont respond to VicDave, He likes to be here when the stock is down, but were was he when the FCC approved, and the stock was back at 2.7. Back in the middle of the old trading channel. I have no respect for any one that spends the amount of time on a subject he knows nothing about or as no vested interest in. (That in my minds eye is a sad sad individual.) Then doesn't have the balls to stick around when it turns against him. Because of that and that alone he is a weisel, along with a sad, sad man.
ace22, You are correct about Cramer not being a fortune teller. The fact is the debt (most of it) did not just appear over night. It has been there since before the merger was even talked about. It also had to be dealt with somehow. I had almost no problem with the fact he changed his mind about SIRI, but to go from 6 to 5 ,then act like 5 was alway his target (Never once mentioned he took it down from 6 just it was said 5, although I said something about it here and at Sirius Buzz That he not once said that he used to have a 6 target.). Then to go form 5 to a 2 dollar lottery ticket almost over night (about a month and a half) was more then most fans of his could take. I liked him, but I have not been a fan for some time. Killerkaul could see that I think. When he would bring him up, I never commented on it, for that very reason. I also have to agree that they have a reason, being fans to be mad at him. Then again them being fans they should have known he has done it before.