Dennis Costa

Dennis Costa
Contributor since: 2010
Company: New Market Players
"Had they been "not short" / "not hedged" and simply taken possession of the shares and then sold them, would they have made more money?
Yup!
Greater risk, sure, but the reward is greater as they would not have lost profits on the underlying shares."
--Always easier to assess history... --The future a bit more difficult, especially if accuracy is the goal...
Its not always been true for SIRI or other stocks now trending higher, that a "short hedge position" would lead to "dampened gains".... Often times, taking insurance on a long term strategy limits the loss, rather than dampening the gain.... Some of us remember and learned that a more risk adverse strategy, keeps overall investment values heading in the right direction...
Sure, greater risk often brings greater reward, but there's no proven correlation to long term success using that simple minded strategy. Investing is a long term adventure to most and should include using all of the tools available..... With Sirius XM keeping emotion out of the equation, or trying to decipher who is the "smart one" in your description of "short vs long" debate, is just not very relevant on any given trading day....
I usually enjoy reading your articles, but this one is a bit over simplistic in looking at the "short interest" and thinking there's a simple winner or loser in the "gross number" being presented. Two weeks late, no less....
I really appreciate the effort it takes to put a transcript of an audio presentation together. With that said, the individual or (software) that reproduced David Frear's presentation did not get the nuance or exactness of the numbers right. A lot of "context" is lost when a SAAR of 15M vehicles being sold, is translated to being $15M in vehicle sales in the U.S.
and if you can make sense of what this means from the "supposed" David Frear Quote:....
"So it’s about a 70:30 split, if you just rough numbers and move around a little bit but figure those 50 million cars sell every year. At 35 years 15 million, all right."
I listened to his presentation, and he was using the company's penetration rate on a yearly basis of OEM installed radios to be at 70% vs 30% not installed, and then applying it to how many vehicles in the "universe of vehicles produced" might have a sat-radio in them to make the point of the market size. With established market size, he then was stating the potential for future growth. This transcript completely misses the point.... sorry guys... you really need to do better.....
That's just page one.... and I stopped..... : (
The premium that Liberty, and more specifically Liberty Shareholders including Dr. Malone was referencing, is the premium that Liberty Media will pay to Liberty shareholders (LMCA) for their conversion to the potential spun out stake in Sirius XM as a separate entity. These exchanged shares will reduce the current LMCA outstanding share count (Float) and produce an intrinsic value to current holders by "shrinking the pie" which will account for the loss of the SIRI asset in the spin out (Balance Sheet of LMCA will be effected).
This exchange from current LMCA shareholders to "buy into" the Liberty Radio spin out is how the Spin Out is created. Not something usually available to retail investors, but will be enjoyed by large Institutional investors.
The Investor participants will receive their premium in the form of a more positive ratio (1 share LMCA for 1.1 share of Liberty Radio, example only..) and possibly some cash incentive paid as a one time dividend. This is strictly an example of the process of what Liberty does to convert their current Preferred stake, to a Liberty Radio spin out.
They cannot do this and maintain their Preferred Share status as Sirius XM shareholders, and Preferred Director Board Members. I believe this is why they are seeking control of the Sirius XM BOD with their "metered" conversion of Preferred shares as presented recently. While this maintains pressure from both a Preferred restrictive covenant status, as set forth in the Cert of Des. for these shares, it also extends common share voting rights to any of "special shareholder meeting" that may be called for on the issue.
All of this is why most think that it is necessary for a "deal of synergies" to be made first, before the details of closing any deal of control and then RMT by Liberty to follow.
This is for sure a complicated business adventure, made more difficult only by its lack of cooperation (common ground) displayed by the parties to date.
LA not to be argumentative but to simply provide information, while the statement quoted in the article you cited is accurate, its interpretation is what is of concern. Though accurate, its author does not stipulate if any part of the plan had already been executed before any decision by the executive was made to then terminate or cancel the plan, as is the case here with Mel.
Its not the termination of the plan before execution or after that I questioned in your comment. That's a matter for another day.
You stated: "the agreement can be changed at any time".
This is simply false and to be technical, its a plan not an agreement. Mel cannot change the plan in any way. The purpose of the plan is to provide an "affirmative defense" to insiders selling or buying shares "without" the use of non public information.
From the link below: "(5) not altering or deviating from the terms of the 10b5-1 plan (by changing either the amount, price, or timing of the purchase or sale of the securities covered by the 10b5-1 plan)" is an important requirement.
This also when read fully, covers any hedging action the executive may want to enter into to offset the effect of a "bad plan" realized now that non public info surfaces during the plan's execution.
From the link below, I did find this which supports the use of an algorithm or written formula in determining amount and price on specific plan dates for buying or selling.
"(2) ensuring that the terms of the 10b5-1 plan specify either (a) the amount and price of the securities to be purchased or sold and the dates for such purchases or sales, or (b) "a written formula or algorithm or computer program that determines the amount and price of the securities to be purchased or sold and the dates for such purchases or sales;""
Here's a link that's worth a read from where my information is gleaned.
http://bit.ly/M6SCOk
There are complicating factors to making changes or terminating, defeating the primary reasons for executives choosing to use the 10b5-1 method for selling shares. They can set "conditions for selling" and they can also avoid concerns that the transactions are based on "insider information".
The volume of shares sold could easily be a result of a "condition set" at the time the plan was developed. I haven't found anything that says that the SP on the planned selling days cannot be one of those conditions. A sliding scale for volume of shares based on SP just seems to be a prudent condition to put into one of these plans. No need to terminate or change anything, which would just bring suspicion into the equation and defeat the plan's benefits.
As a "signal technicality", if SIRI's claims of interference to their signal are correct then this is more in line with "capital preservation" by minimizing loss to the quality of their satellite service. Their subscriber satisfaction and future growth is dependent on these types of outcomes. You say it doesn't enhance SIRI, but more importantly the solution is one that doesn't "degrade" them. Putting more certainty into the "spectrum equation" is good for SIRI subscribers and AT&T in being able to monetize the WCS spectrum over time. Now we'll have to let the FCC weigh in to see if the solution is acceptable.
So You say, but if they convert they become part of the FLOAT regardless of who holds the shares. Psychologically or in reality they "swamp the market" as soon as the become available for sale. Do the numbers and the math is clear. I get your point that until released, as is the case with any large shareholder, they are not in fact having much actual affect. What do you think would happen to the other large shareholders when this type of event occurs? How would you react to the Float going from 3.9B shares to 6.5B shares?
While your example is correct in very general terms, "The Float" should not be used to describe Liberty's Ownership as that is a bit misleading. Liberty's ownership of Preferred B-1 Shares are represented by 12.5M shares, convertible at their discretion into "common shares" at a rate of ~207 common shares per B-1 Preferred. Liberty's 40% ownership exists as "diluted shares" or "as converted" at this fixed amount. They are "reserved" as common shares, as though converted, and within the authorized share count for the company. They are reserved in total as ~2.587B common shares, and have limited common share voting rights. So they are not "common shares" issued and outstanding, which more accurately represents "The Float", or shares available for trading on a daily basis.
If they were converted, they would create a tremendous short term dilution by overwhelming the "FLOAT" and swamping the market with common shares available to trade. While my point may appear to be outside of the point your making, the math to figure out the effect of share buy back is bit more complicated with essentially the same effect, although dampened a bit.
Other than that I agree completely with your example.....
In support of your interpretation and what are pretty clearly now known as the facts regarding Liberty's ownership, the share buyback would "in fact" increase Liberty's ownership as it increases all common shareholders' percent of the pie. This was agreed to by most following the company, albeit at some struggle and debate, after weighing all of the Cert. of Designation stipulations a year ago. While some still refuse to acknowledge the reality, as Mel "again" laid out, it is as it is. Not based on 40%, but rather the conversion rate established in 2009 for these shares. They were then and are now, as converted at a fixed rate.
You brought it forth a year ago after the shareholder meeting Spencer, and here you are having to explain it again. While I debated the issue in opposition, I have long since conceded my misunderstanding of the facts. Kudos to you for getting it right...
Now that right there is pathetic.... So I guess I should just go away because you said so... I've been here on SA since you were Tyler Savery and I was cos1000..... Back then you provided useful information regarding the merger throughout that whole ordeal.
Now as Spencer Osborne you regularly voice your concern, especially since all the satellite radio killers entered the arena. How are they doing by the way?
Your premise for this whole discussion of "concern" started with the company posting "only" net adds of 333K subs in Q3, combined with your interpretation of Mel's statement at the Liberty Media Investor Conference which you quoted as:
"Sirius XM would bring in the most Q4 subscribers since the merger."
You then proceeded to shift the success of Sirius XM to a discussion about Subscriber Numbers, actual new car sales vs seasonally adjusted sales, and your vast knowledge of the metric.
You even have gone as far as suggesting that Mel was being misleading in his statement during the conference. All because he said record subscribers rather than the "actual number" required.
If you went back to the conference call, you would see that Mel is on record stating the 440K subscriber add number as the record subscriber number and that there wasn't anything misleading in his statement.
Here's the link:
http://seekingalpha.co...
...and the quote:
"on our second quarter earnings call, we raised our subscriber guidance for the year to 1.6 million net adds, which we expect to meet. This means we anticipate adding about 440,000 net subscribers in the fourth quarter, up about 34% from subscriber growth in the fourth quarter of 2010."
Now you say I'm here to simply be the antithesis of anything that you say. The fact here is that I am an investor and researcher of the company, and I disagree with you because I believe the basis for your argument to be invalid. I could go on to say that missing on the subs number will have little effect on the financial outcome of Q4. That's a discussion for another time.
We could be talking about record Financial Metrics, such as Free Cash Flow, Income From Operations, EOY Cash On Hand without the assistance of financing activity, Net Income, or the recent return of Lent Shares reducing the "float", but clearly that is not your interest.
Argue the data and the company's ability to meet their stated guidance all you want.... Nothing that has been presented, based on actual metrics that the general investing public can follow, that gives anyone your justification for the negative slant on the company. And you give it nowwwwwwww months away from their actual reporting of their fourth quarter results, and even before those December results role in... What is the motivation for that..... I know... Your just warning us all.... Thanks.
I've followed your writing of the company for years. Your expectations are always a bit higher than the company has been able to achieve, resulting in a group of articles giving more credibility to the competition than the company you always have stated that you are a "long" investor in.
Your history of not thinking that this company will meet or beat its guidance is well known. I've read and been around long enough to witness and attest to that. Move on and just write articles about the competition.... You would be better served by following what you really believe in....
Spencer,
You have every right to doubt the company's ability to deliver, and to have your opinion of what they need to do, but even in the conference call at minute 3:15 Mel stated that meeting guidance meant bringing in over 440K subscribers. You failed to mention that he stated the exact number at the same time he reaffirmed guidance, while instead focusing in on language out of context that concerned you.
Don't get me wrong, your numbers are correct for record adds since the merger in the fourth quarter, but the rest is a bit befuddling and speculative at best, but your entitled to it.
Also there doesn't have to be cheap subscribers brought on as "new" subscribers, they only have to "retain existing ones". Retention of an existing subscriber assumes that original SAC has already been paid. These existing subs, retained, are high margin subs that can be kept at a lower rpu, just as CPO and used car subs in general can. More revenue is better than "no" revenue.
If the "save" desk does a good job, and churn is managed well with incentives, why undermine their efforts. The real goal is FCF and Net Income. Unless you also see the $400M in FCF not being approached, all the rest of this is a lot to do about nothing.
And with those week comments we are done..... Credibility gone...
as far as full impact of the increase.... You give importance to your $100M in imaginary lost revenue.... and argue the actual revenue integration into the company's coffers....pathetic really.
I really was hoping you had more than this......
Just to be clear...... I said after 5 quarters, that full implementation will begin to be realized for a full year.... meaning quarters 6-9 inclusive, out from the price increase date..... I'm just not going to go back and read your other articles to speak on this point for your benefit. It was you who ridiculously spoke about "money left on the table", highlighting $100M in lost revenue from this decided upon price increase.
Your spin is negative... just own it...
"Is your calculation of the realization of the revenue gain in 5 quarters moot because it will never happen that quickly? I did not realize I was not permitted to criticize management. Should I clear the content of my opinions with you before submitting them for publication? "
Don't be Silly........ Criticize away.... Why No response to my calculations though? Your the one claiming that the increase was "Siriusly Below Inflation"
Ridiculous really as I showed ... You also never relinquished that Mel was in compliance with his statements.... Just be prepared to handle the constructive and fairly factual rebuke back if you want to "dabble in the media" .....
As far as Media is concerned, you give yourself too little credit.... I found you on a Yahoo news link under the SIRI quote request. Seeking Alpha has the reach, not you. So represent well.... Be aware as I know you are..
Its obvious that the perception is what matters... The Public wants the facts, but settles for perception. That's why I'm even bothering to comment here under your article. The Facts matter to me, but the perception that you give, is what inspires wrong thinking.
Your defense of the Netflix comparison is ludicrous. You should be setting the facts straight and informing your audience of realities.
If that's not your goal, then carry on.......
I'll start with the last first. The MRF was in fact a price increase, packaged to meet the requirements of the FCC allowing the company to pass through additional expenses. At the time that reflected a 15.3% increase over the $12.95 base subscription charge. Given that, the actual cost for a base subscription using the $1.40 MRF is now $14.35, making the $1.54 pricing increase a 10.75% increase or a monthly charge of $15.89 to all new subscribers.
Let's be clear, the MRF is a Cost Of Doing Business charge, not a government fee or tax, so the way its packaged is quite clever. My point is that it doesn't matter what they called it, except to the FCC and for accounting purposes. They immediately implemented it to "catch up" on expenses incurred as soon as allowed by their Agreement. Interesting what happens when you add the two Price Increases together, $2.94 total price increase since the merger or an increase of ~23%.

As far as revenue realization, it takes about 5 quarters to integrate the increase and realize the near full gain as was the case in implementing the MRF pricing increase, with lifetime & multi-year subs aside. So quarters out 6-9 inclusive should pretty much reflect the full effect in revenue.
I think I was clear that my opinion of your highlighting the $100M was that you were being negative by emphasizing the revenue they aren't getting, rather than the increase they are. Talking about what their leaving on the table is a moot discussion bearing little fruit.
Mel has compared himself to all of the other subscription based audio and video entertainment companies from a churn and total subscriber point of view.
Your falling back on the "Media" as an excuse for your use of the model is quite odd really. When you write an article, You Are The Media. The comparison is simply not relevant and anyone interested in the facts knows that. Netflix is involved in a total restructuring of the their delivery system of video entertainment, with new pricing to go along with it.
While I appreciate the inflation breakdown since 2002, when Sirius was a standalone company, there are very few that would have interpreted Mel's rate of inflation in response to Barton Crockett as 25%. The 3.4% rate since the merged company was born is more likely, in which case the 11.9% increase in price is 3.5 times the rate of inflation. This of course makes Mel's comments during the Q1 CC completely inline with reality.
Comparing Sirius XM's pricing increase to the Netflix situation also would be relevant if we were talking about their original price increase for their combined service. In April 2011 for one DVD at a time plus unlimited streaming, that went from $8.99 to $9.99. or an increase of 11.1%. The problem with the Netflix situation is they then announced they were doing away with this entire subscription plan, separating the DVD rental business from the Unlimited Streaming business and charging $7.99 for each. That combined $15.98 price represents a total pricing increase of over 70% in less than six months to its subscribers. That's not a good comparison to Sirius XM and no wonder the stock has plunged as customers have buried them with complaints. I doubt Netflix's decision had any influence on Mr. Karmazin.
My other concern of an otherwise well written article, is that "highlighting a $100M of lost revenue" is more than a bit over the top. Why not highlight the additional high margin revenue that will be received from the increase, or using your 17M subs, $314M in additional revenue. That number is at least actual, not "what if".
All in all, while the author "Crunching Numbers" says he's long, I find that a pricing increase being announced by the company, is being spun negative for no apparent reason. It is what it is, a modest increase, allowing the company to manage churn, and conforming to management's plan to recoup its costs for employing premium content.
Personally I find the Sirius XM "OR" Pandora argument more than a bit tiresome. While I have no doubt that Sirius XM will survive as a Content Provider on a variety of platforms, including all of those that Pandora can be found on, I do not doubt that Pandora will also survive. That's where I draw the line though, surviving as we all know is very different than thriving.
While "free" is an attractive choice, there are many "free" choices out there for your Music Entertainment. I know that by now you have heard them all.... MOG, rdio, Spotify, last.FM, a thousand and one Inet Radio stations, and Slacker too.
With the crime of Stealing Music being enforced in the form of paying Music Royalty Fees, these "free models" have had their Ad-provided revenue streams diverted to the expense side of the house for them to legally continue to operate. This dampened many of their hopes of being the new Goliath in the music entertainment world.
Sirius XM knew early on, that combining an extensive and unique variety of content beyond just music, on an ubiquitous platform nationwide (satellites), that this would be attractive to consumers. They also knew that they would be willing to pay for it. Up until then commuters were trapped by endless commercials and repetitive playlists, with only MP3's, self "burnt" cd's, and ipods, to free them from their audio entertainment prison.
We need to remember audio entertainment is more suitable outside the home, in cars mostly, and video and other audio choices rule the home. Amazing how some authors hear criticize SIRI for being predominantly in vehicles... big surprise.
Hence the company also knew that if they could generate revenue for their automotive partners, that they could secure the dashboard real-estate necessary to distribute their services.
That's also why Sirius XM didn't go after the younger "still looking for my first job" crowd. They instead went after a more mature market with disposable income that knows what it wants, and is willing to pay for it. This market segment buys new cars, sometimes two of them, and now more than ever wants those vehicles, all of them, equipped with a means to listen to their favorite content. So there is still room for free, but if Premium content is what your looking for, your going to have to pay for it.
Ad Revenue for Sirius XM is a Bonus revenue stream that comes from all of those "non music" premium content channels. Its not a necessity to survive, but it certainly helps them thrive.
Even having said that, their annual ad revenue net fees this year alone is approaching $66M, with $32.5M for the first 6 months of this year alone. Pandora's total ad revenue, of which it is mostly dependent on for the full year 2010, was $77.8M and its total revenue for the same period was $90M.
Remember now, thats an Ad Revenue Comparison only of the two companies. Sirius XM's total Revenue for 2010 was $2.8Billion with a B and is expected to approach $3B this year.
We have heard for years now how Pandora's free content model, and genome project algorithm will destroy Sirius XM. The fact is, it just hasn't happened. The reality of the situation is that they are less competitors to each other due to each companies' targeted markets, uniqueness of content, and business model,than most wish to concede. I guess it nice to have your name mentioned in the same breath as a truly successful company. Investors in Sirius XM have known this for years.
Why Sirius XM investors give more credit to Pandora than it deserves as a true competitor has always confused me. In my opinion, they will both survive, but my money is on Sirius XM continuing to thrive and make money for its investors.
Homer, I raised questions about these types of events on my site this weekend, when reading through the Cert of Designation again. I touched on the ~294M convertible at 1.87 from the 7% notes, as being in themselves a 7.4% slice of the float. I was coming at it from a different perspective, as we all know these events will not all happen at the same time.
The employee bonus shares are yearly, a slowly building volume issue, that represents less than 1% by themselves, but I didn't get a chance to discuss the return of the lent shares which will happen when all of the 7% Convertibles are paid in full bringing back the full ~263M lent shares, (60M already back an out of the float).
As you know with these 7% Convertibles there isn't a company driven "call option". Only the Note's holders have an early redemption option. It can't be derived what each holder will do. For now there seems to be value in these QIPs trading these notes among themselves in there own private sale market, with 424B7 Supplements filed occasionally by the company.
While I had thought these combination of events would result in a relative "wash", leaving the variance in the float at still less than 1%, I had believed the Converted Shares themselves would have been an event for a conversion adjustment if the timing where such, that more than a year existed between say, when the a majority of the notes were redeemed, but lent shares not returned.
Anyways the discussion never got that far, because as we all know this is just a simple matter, etched in stone..... With nothing to really talk about now that Mr Karmazin has spoken... : )
Homer985.....
I really feel that when the Capital Stock Buy Back Plan is constructed, all ambiguity will be removed and we will then know where this all shakes out and as you say, probably somewhere in the middle.
As always thanks for taking the time and using the correct document to base your position on.....
Cos
The research into the Certificate of Designation had been done by me now two years past, but is always a part of my fact-based file for writing and commenting on what Is and Isn't regarding these shares. You say you wrote this article because of my behavior, and yet you proclaimed that the conversion rate is fixed and etched in stone, based on information provided at the Shareholder Meeting.
You never researched the documents before making your claim. I have spoken to IR only to get "not always well informed" answers to some of the more basic questions. There are many references to the variable conversion rate in the document I linked to.... I listed section titles along with the miscellaneous, subsection (e). Have you read all of these sections, or are you again simply relying on Word of mouth from IR and Mel in his presentation? Not a very professional manner to conduct yourself..... verify, verify, with solid written source information..... When the time comes for A Capital Stock Buy Back Plan to be executed, we will then have another Written Document to rely on, and not word of mouth, or a nod and a wink.....
The issue has always been in the discussion of whether or not the "conversion rate" is "etched in stone" and "NOT Variable". If you would take a minute and read the document I have linked to, you will see that it is indeed "variable" under many conditions. Including an increase of common shares beyond 1%. The convertible 7% bonds, if converted at their $1.87 conversion rate, will provide an "adjustment event" that protects the dilution of Liberty's position by varying the conversion rate.
The point of whether Mr Karmazin needs to be careful when buying back shares, is a different one, but of course he does. The Board, along with Liberty and the rest of key Management will develop the document that will then represent a Capital Stock buy back plan. We do not have that document yet. What we do have is a document that defines the rights, preferences, and privileges of the B-1 shareholder. And in that document, we have many Adjustment Events that make the conversion rate variable.
These are "Perpetual Preferred" B-1 shares, so they do not have an expiration date......From the Certificate of Designation:
"Section 6. Maturity .
The Series B-1 Preferred Stock shall be perpetual unless converted in accordance with this Certificate of Designations."
Just to add..... The reason that the conversion rate share count to date has not adjusted up or down, even though the outstanding issued share count has gone up, is because the amount of variance has not yet exceeded 1% of the total outstanding share count. That's also in the C of D. I'll let you search for it yourselves...... Have a good day all......
In all current filings regarding this issue, after giving a summary of the shares of Liberty Preferred B-1 at 12.5M, with a conversion rate as it exists on the day of the report, also contains a reference to where all of the information regarding the rights, preferences and privileges of the preferred stock holders can be found. It doesn't matter if the summary is contained in the most recent Proxy Statement or in every 10Q, 10K, & Annual Report since the Liberty Investment Agreement and Certificate of Designation was filed on March 6th, 2009.
None of the statements from either company's management, IR staff, or otherwise, replaces the Certificate of Designation as it is written, signed, and filed with the State of Delaware and the SEC.
The Certificate of Designation contains a glossary of terms (Sec 3) that includes definitions of items like: "Adjustment Event", "Conversion Date", "Conversion Rate", "Record Date".
It also contains Sections Titled: "Dividends", "Liquidation", "Conversion"(sec. 7), "Conversion Procedures"(sec. 8), "Anti-Dilution Adjustments (sec 9) and my Favorite Catch-All Section, "Miscellaneous" (sec 17) in which in subsection (e) it states:
"(e) Adjustment of Shares Numbers . If, after the Issue Date, there is a subdivision, split, stock dividend, combination, reclassification or similar event (“ Adjustment Event ”) with respect to any shares of Series B-1 Preferred Stock or Series B-2 Preferred Stock, then upon the effectiveness of such Adjustment Event all references in Sections 11 and 12 to specific numbers of such shares shall automatically be adjusted proportionately, so that the Holders of such shares will retain the same rights under Sections 11 and 12 immediately following the effectiveness of such Adjustment Event as they did immediately prior thereto."
It would seem to me, that rather than talking to IR of Liberty and Sirius, a dedicated researcher and blogger would know enough not to draw conclusions from summary reports, or share shelf filings, but that they would dig deeper into the Agreements and Certificates of Designation for the shares types their talking about before speaking.
This is not a simple issue. It takes research and then applying the research to a yet "UNKNOWN" and "UNDEFINED" event: Sirius XM's Capital Share Buy Back Plan. To date they have none. I can guarantee that before they do, a definition of how the Preferred B-1 shares will be treated / converted will be included.
As to the question of whether or not the Preferred B-1 shares are "fixed" or "variable"..... It is very clear from the Certificate of Designation, that there are many events where they are adjusted, so they are Variable.
Now Here is the Link to the CERTIFICATE DESIGNATION, FOR YOU ALL TO READ THROUGH AND SEE THAT INSULTING EACH OTHER WILL NOT CHANGE WHAT IS CONTAINED IN THE DOCUMENT.
investor.sirius.com/se...
I am actually comfortable as written with the 2.66 by the end of the year, and I did say current price at 1.98 was fairly valued. In order for me to raise the end of year price target, as you suggest, they would have to raise present guidance. I am using forward looking numbers even for my EOY pricing (2012 Adjusted EBITDA).
Having said that, and having listened to the conference call and received their Actual results, I am still comfortable with my estimate for EOY SP at this time. Raising FCF to $350M from $300M without raising Adj EBITDA makes little sense. Just more of the company not wanting to share to much at this point in my mind, and as I said in the article, I still think their "Silence Is Golden" and shows strength.
Thanks Heady and Cameron...I do what I can....
Now that they are keeping silent, it is more imperative than ever that those who have followed the company and have a good handle on the business end, put forth as much factual info as possible so investors / traders can have a chance. You know those on the "short" side of this investment will do their best to put out misinformation whenever they can. My conservative view comes form of years investing, trading, and following the stock...
Not a pumper, just a guy trying to make a buck and assist a few others along the way.....
Cos
I didn't write the article to tell you that I sold 1/3 if my position. I wrote it to give my well researched opinion on how the company will report and why. My disclosure is just to be honest on where I stand personally on the investment, but you already knew that right? How much "skin" do you have this game of buying Sirius XM shares?
Sorry SSFan..... I read the first sentence and had to respond below before reading comments..... I just don't have the patience for it any more...... Of course I agree......with your comment.
"Sirius XM Radio (SIRI) is a leading satellite radio service provider in the U.S., offering over 180 channels with music, sports, talk shows, news and more."
Didn't anyone tell you guys that the "only two" satellite radio providers in the U.S. MERGED. They are now not only a leading provider, but the ONLY provider......
I cannot remain silent any more............. Enough already with the per click content here..... so sad.
You should visit the filings of XM and you will find a Form 15-15d filed for XM Satellite Radio , back on June 3rd, 2010:
investor.sirius.com/se...
....and the more recent filing in January 2011 on the 8K filed with the SEC by Sirius XM Radio Inc completing the merger process, with XM Satellite Radio Inc. into the surviving entity:
investor.sirius.com/se...
There are no covenants keeping them from merging... They are merged. Any consolidation now of Business Functions are a business decision and are not dependent on debt covenants, but rather cost synergies or revenue generating opportunities.
While you minimize the merging of the online website by calling it a "small example", it will be the foundation for the future in how the company presents itself to new and existing listeners (branding). It will become the "one" interface for all online functions and products. It's player will be the player for all programming regardless of the "satellite constellation" your satellite radio is broadcast on. Whether streaming or online this is the foundation for the future of this company on-line and on smart-phones. The OEM Sat Rad issues are still in front of them.
I think the pull back here is necessary even if a bit overdone as most pull backs are... especially when the last 15-20% rise is supported by momentum traders. Building a base will be good for the Stocks longer term health and support.
Ford is ahead of the game now, after having the foresight to refinance its business in 2005, making a strategic move to finance and restructure that almost brought the company to BK in 2009.
Instead of bankruptcy and government bailout money, the company was position to take market share from its US rivals during the year. Add Toyota's safety and resultant image hit, costing it near zero growth in 2010, and we see that Ford in taking market share, was able to remove 14.5B in debt, and become cash/debt positive. The possible result in later 2011 might well be that the company's remaining debt will achieve investment grade.