Earlier in the week I wrote that there were several factors that had great importance surrounding Sirius XM (SIRI) and one of those was the status of CEO Mel Karmazin. Today, after the close it was revealed that after 7 years at the helm of the satellite radio provider Mel Karmazin will be leaving Sirius XM. The Board of Directors has already formed a search committee to seek out a replacement.
While the announcement removes the cloud about the status of Karmazin, it has only been replaced with a new cloud about who will replace him. The dynamics of this equity that we have all become used to may now change.
On October 17th I wrote that in order for this company to see $3.00 in the near term and hold it there were five key elements that needed resolution. One was 2013 Guidance, another was news surrounding an anticipated share buyback, a third was the status of Liberty Media and CEO Karmazin, and lastly the Q3 earnings call as the stage where we would get most of this news.
With the announcement today it is clear that Karmazin is gone effective February 1, 2013. It is also clear that Liberty Media (LMCA) will be likely getting to push its agenda with regard to Sirius XM (otherwise, the announcement today could have been a Karmazin renewal). What is still up in the air is 2013 guidance and an anticipated share buyback.
While Karmazin leaving may see this equity testing the 20 day moving average at $2.75, and perhaps the 50 day average at $2.60, there is potential news that could reverse that downturn in short order. That news is Guidance and Share Buybacks. These are now more important than ever.
If Karmazin leaving is seen as a concern, what better way to ease fears than to put out expectations for 2013 that show that the company will still remain on track to be a powerhouse media stock? Further, what better way to demonstrate the ultimate confidence than to buyback stock!
While the next week may be a challenging one for this equity, there is great potential buying opportunities at hand. In my opinion a share buyback is a given, as is the announcement of guidance for next year. These announcements will give investors and the street confidence going forward. Bad news today can present a buying opportunity that may not arise again in the near term.