Sirius XM's Bottom Line Could Get a Boost from "Best Of" Programming 131 comments
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I write about satellite radio. I have Sirius (SIRI), and have had XM. It sort of comes with the territory when you cover this sector, so when the availability of the BEST OF programming was announced, I found myself compelled to at least give it a try.
Thursday morning I put my investigative cap on and called customer service to not only add the new programming, but to ask a few additional questions as a “curious consumer” so that I could write about my experience.
Tyler - How is the response to BEST OF? Are you getting a lot of calls?
Customer Rep - Actually yes, we are getting a great response so far. I’m surprised by the number of calls adding the service. Did you want to add it month to month or pay for a full year?
Tyler - Well, how much will the service be if I do a full year?
Customer Rep - Your annual plan just lapsed a couple of weeks ago, so you are on a monthly plan right now. It would come to $186.89 if you renewed for one year with the BEST OF. This gives you 1 month free.
Tyler - I see, if I pay month to month it would come out to $203.88 for a year. Do a lot of people take advantage of the annual plan?
Customer Rep - Not everyone, but many do. You can break it up into two payments, so that makes it a bit easier for people.
Tyler- Okay. Give me the full year, and break it up into two payments.
Customer Rep - Great, you have a small credit on your account, so we will apply that first. The balance will then be $177.67. Half will go onto your account now, and the other half next month. Do you want to use the credit card we have on file?
Tyler - That would be fine.
Customer Rep - Great, you are all set. You have a Stiletto 100. When you turn it on you should see a channel update. After the update completes, power the unit off and on again, and you should be all set. If you have any problems you can always call. Can I help you with anything else, or do you want any of the other radios on your account upgraded?
Tyler - No. Thanks.
The conversation gave me a good feeling about what is happening with the BEST OF programming. Seeing that the passionate satellite radio subscribers are reacting well to the initiative is great news. Likely, many people are adding right to their existing plan, and therefore paying in advance. This brings cash in the door. If the reaction is substantial, it could mean millions of additional cash on hand for Sirius XM Radio as they go into Q4. Such cash would not only bolster the company's position, but give them some latitude in marketing expenses to promote not only the BEST OF, but A-La-Carte as well.
With all of the bad news of late, this little conversation gave me a bit of faith in knowing that the wheels of satellite radio are still turning, and that while the economy has many people concerned, they are still opening up their wallets to get the additional programming being offered.
In many ways, Sirius XM announcements lately have fallen victim to the overall bad news of the economy. We now have the potential of seeing the bailout package approved before the weekend, and Sirius XM to have positive things to say on October 6th. For once, the timing seems to work in the favor of satellite radio.
Position - Long SIRI
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This article has 131 comments:
SIRI should have never merged with XM - huge mistake. If SIRI had saved all that money spent on the merger and concentrated on the business it would be in the black by now and XM would be bleeding to death. When XM died SIRI would have owned it all anyway.
I'm still bitter at how Mel killed the loyal stockholders the day the merger was consumated. We all got screwed. Every time Mel gives an interview the stock looses 10%.
So what is BEST OF? It looks like a way to cut the number of licenses that the individual companies would have had in half. People with both services understand that perfectly. BEST OF combined with a la carte for $6 will kill the revenue stream.
SIRI stock will not rise until the company stops loosing money, which will not be for a year or two- if it survives. If the Dems win the election, and it looks like a lock, the FCC board will be repopulated with Dems loyal to the NAB. Then its over. They will lock subscriber costs for a further 3 years and invent new restrictions in the name of consumer protection.
Meanwhile there will be tons of better stocks to invest in due the the market crashing as the economy goes further in the toilet. There will be a mass exodus of stockholders driving the stock down further.
1. You mentioned SIRI should have never merged.
What would happen if Apple, Microsoft, Google would have acquired the dying XM. Note the difference the same thing is going to happen in future whether SIRI is dying or doing well.
2. BEST OF combined with a la carte for $6 will kill the revenue stream.
Do you know that more people would buy at such a low price.
3. Every time Mel gives an interview the stock looses 10%.
Becuase he always low ball the estimates. Estimate is estimate. The day is not far when he will speak with proof and the stock will rise 100%.
4. If you are convinced with the business model, management, and see a long term benefit only then you should buy.
health of financial sector as a whole---> availability of credit
Industry Penetration, Customer Sentiment, Auto Sales, Competition ---> Amount of Sirius cash and liquid assets ----> availability of credit (or hopefully ability to satisfy debt outright)
Industry Penetration, Customer Sentiment, Auto Sales, Competition ---> Improvement of Sirius's Cash Flow and Balance Sheet ----> availability of credit
Assuming the availability of credit or the cash to satisfy the long term debts as they become due is crucial to the survival of the firm as a stand alone company, I am sure there are more correlations and factors to be proposed. Thoughts?
1) What if... What if the Beatles had had a drummer. We will never know.
2) SIRI is reaching a high penetration point for people who, like us, are willing to pay for radio. The new subscriptions will be offset by people dialing down, from $16 to $6, to a-la-carte subscriptions reducing revenue.
3) No, its because Mel makes a fool of himself
4) What? this make no sense
health of financial sector as a whole---> availability of credit
* The financial sector is in the ER. Many will not survive even if the bailout is passed.
Industry Penetration, Customer Sentiment, Auto Sales, Competition ---
* SIRI industry penetration is high, customer sentiment is good for current subscribers, low churn. Auto sales are in the can, look at F and GM 5 year charts, there is a message there
> Amount of Sirius cash and liquid assets ----> availability of credit (or hopefully ability to satisfy debt outright)
* bad, really bad. SIRI will not have enough cash to cover debts and credit will be really tight. SIRI can not issue new shares to pay debt at .60 per share.
Assuming the availability of credit or the cash to satisfy the long term debts as they become due is crucial to the survival of the firm as a stand alone company, I am sure there are more correlations and factors to be proposed
* Yep, that's important. The Current Ratio and Quick Ratio are both 0.3. They were 0.6 at the end of 2007. The Debt Equity ratio cannot be calculated as there is no shareholder equity. Total Liabilities are about 1.6 times Total Assets. All in all a very bleak picture. I would not loan SIRI any money from my bank, i'd be betting my job on SIRI. Would you bet your job on SIRI?
.
Now, I am a day trader and I will do what day traders do. I will look for buying and selling opportunities within cycles and may play a little ping pong with this stock. I suspect that you have been experiencing that from other day traders as you sit and cherr for SIRI to go up and stay up. OMMMMM, OMMMMM. That doesn't work.
The last 2 years of owning SIRI have been as fun as almost burning to death. I feel for you and understand your pain.
* bad, really bad. Siri will not have enough cash to cover debts and credit will be really tight........
Sirius has a GM and a Space Systems/Loral credit lines with zero balances on them currently, which is GM $150M and SS/L $100M. Understanding these lines are meant to finance equipment, if used, they would free up additional capital to pay the Feb. 09 debt.
Aside from these lines, Sirius XM is will be generating huge amounts of cash in the 4th quarter from Best of Both @ $4/ mo, and 20% participation from existing customers. Using 19M subs, that's an additional $182M per year. At 30% its another $288M from this program alone.
In addition the retail sales for the new equipment will finally be freed up by selling new equipment capable of ala-carte and Best Of which will surprise folks when reported in February 09
Additional cash is also being freed up from resetting of subscriptions when the B of B is added to an existing sub with 1 year prepay. All prepays bring cash on hand up. They also do not have to refinance the total $300M in Feb 09 debt. They could easily pay down half and refinance the rest or utilize other facilities above and pay it off.
The next debt due is in May 09 for a total of$350 M. These are bank facilities that are currently provided by banks who are also invested in the company's success. The facility has always been paid on time and Mel said he was already in talks and would be looking to extend the date of expiration on these facilities 2 or 3 years and was confident that whey would accommodate that request. There hasn't been any news to doubt that he will execute that plan.
Your assessment my friend is pure conjecture with very little fact to support it.
Your argument was "SIRI should have never merged with XM - huge mistake."
Does anyone agree?
Hope you are going to be the next Bauren Buffet.
I think you have a lot of wishful thinking on the revenue side and for any more borrowing given the economy and credit markets. Both Ford and GM are broke although they won't admit it. How else would they have gotten a congressional bailout package? If Ford fails it will put a huge dent in the revenue, and it looks like they will within 6 months. Your best investment now may be a convertable Mustang, which will be worth a lot later and you can use in the mean time.
Has it occured to anyone else that Mel totally and intentionally screwed all of us who had risked a lot of money on the merger getting approved, and even bought more stock just before it. All of our analysis on the merger was right, except the Mel factor. He anticipated our selling on news of the merger and beat us all to the punch by issuing new shares to pay the debt at our expense. All that crap about doing it quickly because he was afraid of a suit to block the merger was crap. You can not trust him. He will screw you again.
someone could explain me this? I'm going crazy now
Ur not as fun as Im not jim cramer and a few others. Your too transparent, and ur comments are worth mentioning. Please get better.
You guys still think the merger was a good move? Get serious.
2. All detractors as a group...I just don't understand what you guys are looking at. You are clearly not looking with experienced eyes, that's a given. This same story has played out many times on Wall Street. Where were you then? Obviously not watching. Maybe in the end, the SIRI story will teach you something so when you see it next time, you'll know what you're looking at.
3. Relmor..I finally was so enraged, I broke down and signed on at The Fool. After i posted I saw you. I gave Rick a good beat down. wtf is up with this a-hole!....
4. SIRI doesn't take out the Sept 30 low. Now we can finally move on afer the vote. Coming weeks will be much better for the doggy. Have a good weekend.
I don't even listen to them... All they do is regurgitate old information that we have seen everywhere else...
Guess what... Even the media has ALMOST completely stopped talking about the company not making it... Only ones still out there are the idiots that still think it news to us....
Good post. Anyone is right to be cautious about this economy and saying it is never a bad thing. You obviously have intelligence behind your words, so... worth a response.
A few thoughts from me. Congress just spent the last two weeks allowing the U.S. economy to nearly grind to a halt--while also allowing the contagion to spread overseas. It will now take at least two weeks to get back to where we were two weeks ago--which was in critical shape even then. Banks/other lending institutions now though will have to be the ones to step up and turn their spiggots back on. After watching so many of their bretheren fail, it's no surprise they essentially hung the closed sign in their windows--classic self preservation. They now have nothing or at least less to fear. The Fed will lower the funds target next week to 1.5% and slowly the blood will begin to flow back into the arteries. We were literally being strangled while our congresspeople were grandstanding and putting pork in that bill so they could use their role as election ammunition. Sad.
But think of this. We are actually fortunate that the holidays are right around the corner--which is the main consumer expenditure season of the year. We're lucky it's not July, or things would take much longer to kick back in. The beloved holidays in this country is a time of year where too much is at stake on many levels. Not only psychologically, but also that it is the bulk of every retailer's yearly top line stream. This is known by all so it will not be allowed to fail--and of course for it not to fail, lending MUST be back on very soon.
Where SIRI is concerned, there are obvious reasons for people to sound alams regarding the stock. Unfortuntately for them, being obvious right now is a handicap. But if you look close at the charts and couple that with SIRI's timeline with this deal, there are plenty of good signs in the mix. The credit issue has caused delay for the company. Few people if any, mention that (or believe it). The stock has shown decent signs of bottoming. Even yesterday if you were watching RT/LVL2, you saw the resistance intraday @ .60 then at the closing bell, @ .58. The truth is, for many days now, they have been having trouble taking the stock below its low of .57. And for good reason. The end of this whole charade is near. Wall Street 101, right out of the manual. What most people refuse to get is, is SIRI was really a failing company, two weks ago, the stock price would have been .25. Most people don't get to see the game that is being played everyday in LVL2. I think you know, if the big players knew this company was going bye bye (and they would know before anyone), the stock going to be reversed, anything weird, it would have been all over weeks or a month ago. Bid/Ask today would easily be .1266/.1267. There is no mercy on Wall Street and there is also no hiding the truth. So...all believers should take heart in the truth and the facts, not the bs...
Also, what's this I hear? The stock market looks 6 months out? That's a fact that gets reported only when convenient. But my guess it you will now start to hear that sometime in the very near future. Sidelines money will also very soon start flowing back in to the market. It has to if managers are going to make any money at all this year. I also predict WS will be more forgiving about Q3 in that forward-looking outlook... really, duh, what else do they expect? The country was nothing but in a crisis all of Q3. Better days are ahead...
Most people live with tunnel vision all their life, the possibilities here for the company to grow are endless,
Just to mention a few :
1. Music from coast to coast sports etc
2. road side assistance for all car manufactures (currently only limited CO offer this
3. Agreements with sat TV CO
4 Agreements with Telephone manufacturers & CO
5 Agreements with HIGH SPEED internet CO (HIGH SPEED INTERNET SERVICE ANYWERE FROM COAST TO COAST EVEN UP IN THE ROCKIES, every car can be equipped with just a USB port
for instant internet access
6. all of the above section 5 can apply to airlines and marine (recreational boaters no need for other providers)
HELLLLOOOOOOOO !!!!!!
AM I GETTING THOUGH TO ANYONE HERE ?
Just to mention a few,
There are some differences between GE's situation and Sirius. They have existing relationships with their current creditors. They arent asking for more debt, just old debt to be held off on collecting(bonds due, can make future payments, dont need new debt, just need more time). GE needs new money, now. Not tomorrow, they have sooo many more expenses, and much more possibility of going in the whole then Sirius(much lower expenses, less complicated business, easier to prove growth, etc...)
GE got into financing debt, Sirius isnt.
GS Markie was just justifiying the price.....50 cents is new target, probably wont get their, but it might. Who knows.
GS said 150 barrels of oil, then pulled the plug at 148? Coincidence? Come on now, we dont believe in those do we?
They called for 200 dollar oil by the end of next year? Get real, thats so we dont complain when oil is back to 150 sillies. It cant get that high, it would cripple the economy.
Please stop tellling people to buy a sub. Its annoying, but hey, its a free country. Your not doing any good, and its reaks of desperation, of which I am not, thank you!!
Sirius (SIRI) could have three sets of credit problems. The first is that most of its new business comes from the car industry. A tight auto loan market is undermining sales. Then, Sirius has over $2 billion in long-term debt, so its ability to refinance that to give it operating room gets harder each day that corporate lending gets worse. But, the biggest near-term problem is whether Sirius can continue to finance inventory. In other words, what if it cannot get financing to cover the costs of a two million or more radio sets each quarter, on top of maintaining and upgrading its satellite and broadcast infrastructure?
Futures in the red... Markets most likely open down and a turn around in the PM to finish higher...SIRI due for an upturn this week.
But yea... aren't we supposed to have a report today on the 3rd qtr?
I ask a question and everyone is gone??
lol
2. CNBC/Wall Street = HYSTERICAL!!!
You just gotta laugh the games!...
btw... for anyone considering throwing themselves off a tall building today...
NASDAQ New 52week lows = 1082; New 52week highs 3. Don't be scared. It's just games. Please, don't do what they want you to...
I had to google your reference but found out it was from that chick flick Titanic. What's up with that?? dude...it raises serious questions as to why you're so freely quoting a chick flick??? hmmmm.
What a surprise
Weinkes was dead on at .50?????
Does that ring a bell for anyone out there that can do some thing about it??
Well This...I didn't hear about any earnings announcements...
Very complex environment right now. You've got everything from hedgies unwinding to indie moves to auto stop loss to just backwash in negative news.
I will say this. Mel couldn't have done this at a better time. If anyone here concerned about SIRI's stock price has noticed, ALL Tech has just gotten killed of late. AAPL, RIMM (jeez, how'd you like to be on a RIMM blog about now!!), chips, AMZN, YHOO, Tcom. I guarantee all of you here that if SIRI weren't in their current situation, let's say for the sake of argument $2.50 as of last week, they would have closed today @ 1.50. Look at companies like AKAM, LVLT--(which is a good short-term momentum play btw...). SIRI would have gotten taken out no problem during this...so no worries! All is relative.
Tavares, man you are one sick dude. what are you even doing here? Sirius Investors and Koresh followers, how pathetic and your LOL. even worse. You are certainly part of what's wrong in the world. Finding entertainment in others misfortune, the Koresh followers, that is....
killerkaul, who knew? hope you kept some powder dry, I'm hoping to get some tomorrow, no funds available today. Electronic transfers post the next day. .50 would be good. We shall see.
It would do all SIRI holders good to look at the vitals for a company like CSCO. Totally different side of Tech, but just look at their performance.
5.89B shares out (with a 5.88B float)
EPS of 1.31
8B in earnings on 39B rev.
And a company that always keeps x billion laying around in cash.
CSCO, considered one of Tech's more solid companys with positive earnings, no credit issues and plenty of cash, is a very range-bound stock--albeit a decent $7 range. A short fav and then a good long play on the dips. Look at a 2 mo. chart on them. Good techs get hit during down times--not just those facing financing issues. Also shows the performance and movement of a stock with almost 2x the shares out and float of SIRI.
This not to recommend the play but to opine that when SIRI handles the debt issue and goes then realizes positive EBITDA, even with the 3B SO, they will have no problem making a very decent move. Not for the detractors though! (lol)...
I think this week could be a repeat of that mid-Sept week where SIRI drove up 4 days in a row after hitting that .68 then-52 week low on the Monday. That was 10 days ago. SIRI's now been flat or down 9/10 days since then. Overdue for a little rally.
I almost wrote this morning that I thought the DOW would wind up going positive today. Maybe had it not gone down 800, it would have. As it was it came back 450. Nobody really wants to be too long or short overnight these days. But they know the snapback long is VERY imminent. To me, a classic Friday/Monday Wall Street sell dance today--esp. on the news. I'm mean jeez, we NEARLY took out 1000 on the S&P today--we were THAT close! If that's not a low for a bottom (at least short term, I don't know what is).
Big rally is coming and us little guys will not get a chance like this again.
Unfortunately for me the game ends at .40 cents, and I can no longer hold my position, due to day trading requirements. Since I dont trust this stock, I wont sell to see if it gets there.
I still say hold till market crosses back into the 10500 range.
Tyler called it right on in a post how the merger news would go down. They played the players with this one. They showed you their hand soooo early, I didnt think they had the balls to drop it this low. I was wrong. Market timeing is very very very bad. Worst economic news weve had in our lifetimes. Be glad Sirius is still in business.
spec. stock rule, ride it out.
The market will generally be looking past Q3 due to financial crisis. Q4 will have more meaning but will be better. All the ugly shoes appear to have dropped. Next weeks will be better news as solutions are revealed--new exchange for the CDS debacle, gov working on toxic mortgage paper, Fed Funds down to 1.25%, credit reflow. Plenty of upside to offset Q3. Sidelines money will start to return. Market should pop to about 11.3 next few weeks.
SIRI way due for a pop right here.
As of 2:45AM
DOW FUTURES FUTURES +121.00
S&P 500 FUTURES +17.70
NASDAQ FUTURES +20.50
Australia's central Bank cut down their interest today by one (1) percent point a big drop, more and more central banks will follow, The Fed will drop it to 1% very soon, my point here is that will soon start to see revovery in all markets, very soon .
I also lost around SGD 130K since I started buying at 6.70
I do not know about the manipulation, shorting, etc but was convinced that the product is good, the comapny is growing, scope is huge.
Still hopeful and plan to hold until company declares 400K saving in synergies, goes into black, and may be until another big company off to buy it.
Although you are more knowledgable so unable to give any advice but still feel that we should stand firm and wait until financial storm to calm down.
As sl62 mentioned correctly that even the big stable companies like CSCO has been adversely impacted in the current situation.
en.wikipedia.org/wiki/...
"Karmazin ran Infinity for 15 years, then sold the company to Westinghouse, then parent of CBS. For most of his career he has been known as a "Wall Street darling" for his ability to drive up the price of his various companies' stock. "The joke about him was that he was so pushy that advertisers used to buy airtime from Mel just to get him out of their office," according to a Fortune magazine article.[2]"
I've also posted Mel's cred in the past. A good reminder to all...I also agree w/ your price targets.
fyi to all, Relmor's dealing with something different other than losing confidence in SIRI. To maintain status as a day trader, you have to maintain a minimum 25K equities and cash balance at all times. My guess is if he sells, it's because he has to not because he wants to.
We're all frustrated because of losing paper cash and over a prolonged period. SIRI = a good normal case history of what Wall Street is about. It's very hard not get one's self underwater for a stretch--which = major frustration. No one could have predicted the financial crisis to this degree so most plays have lost traction. But sometimes all you want to do is just get back to even so you can sell and move on. But that's not usually how it works.
SIRI is never in doubt of staying in business. You don't go out of business when your revenues are 300M with a growing sub base and nearly equalled to Comcast in size. Since the beginning, they have increased their sub base Q to Q without one dip (which is verifiable). They will be 10 years old next year. Today AKAM rang the Nasdaq bell celebrating their 10 year. Sometime next year, you will see SIRI do the same. They will be here for quite some time to come executing their particular model and selling their service to consumers--who will buy it...even long after Mel departs the company. Maybe eventually they will be absorbed by a larger conglomerate--which would make sense considering their unique positioning. They're a solid company caught in growing pains at the moment.
One thing is for sure in the near-term for markets...volitility.