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Stephen Faulkner

 
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  • Dissecting Sirius XM's Subscriber Picture [View article]
    "Let not forget the 3 bullets that the starving child's government buys with your donated/income tax money or your billions of US tax dollars that are wasted propping up these governments in the form of foreign aid."

    HAH! Nino you finally said something that makes sense...
    Nov 5 11:37 AM | 3 Likes Like |Link to Comment
  • Dissecting Sirius XM's Subscriber Picture [View article]
    And they say the economy is bad! ;) Hah! I'll believe it when people can't afford $10 beers ;)
    Nov 5 11:27 AM | 2 Likes Like |Link to Comment
  • Dissecting Sirius XM's Subscriber Picture [View article]
    But churn relies on net self pay not gross, so there is a lead / lag effect when someone buys a new vehicle. In the month they buy the vehicle their cancellation hits but the addition to the net pay doesn't until the trial period ends. This will have a negative effect on the churn number in the month it happens and a positive effect on the churn number in the month they become self pay. This weights churn heavy when auto sales are increasing, and weights churn light when auto sales are decreasing (for this component of churn).

    The great thing is that with auto sales increasing, churn has remained low, hinting at lower cancellations due to dissatisfaction with the service.

    I'd argue that greater than half of the churn number is due to cars being sold / replaced.
    Nov 5 11:24 AM | 3 Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Correct there should have been negative impact from both the price increase as well as new car sales, but to date there really has not been.
    Nov 5 06:52 AM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    I'm not sure of your point. Of course there's ramifications on growth. Automobiles as a consumer item are replaced on a regular basis. As such the greater the installed base, the older the vehicles, the higher the impact on churn resulting from current subs moving from vehicle to vehicle.

    For instance if we go back and assume year 1, where 0 subs move from vehicle to vehicle, that component of churn is 0. All churn for that year is based on other factors. Now assume other factors stay equal as a control, but move down the line to a point where 17% of current subs swap vehicles out (assuming a 6 year ownership period of vehicles). Impact on churn then is 17% total per year, or 1.42% monthly churn. This is the impact ONLY from moving from vehicle to vehicle.

    Unfortunately people love to communicate that churn number as "people who choose to cancel the service" and while that is technically correct (these people are not being forced to cancel unless SIRI cancels them due to non payment), there is a growing component of this churn which are subscribers who purchase another car and are not "cancelling" but rather switching devices.

    Oversimplifications are necessary to prove a point without complicating matters. In this case there are so many moving parts controls must be put in place to isolate effects of a single moving part, in this case the effect on churn when a current sub buys a new vehicle with a promo trial.

    The lead / lag effect should be evident here in the fact that when there are ramping vehicle sales, churn is negatively impacted but the results to overall subs is actually positive given additional exposure due to increasing new vehicle sales and the fact that individuals who are not currently exposed to SIRI become exposed to it.

    It would be nice to SIRI would break down the churn number but I don't see that happening anytime soon. Unfortunately, this leaves it open to inviduals miscommunicating it (in my opinion) with severe bearish bias such as the quoted characters are doing.

    "If you want to argue that the number of self pay subs is higher each year, well, let's hope so"

    Has it not been? Am I missing something ? =/ Unless you are talking about the future here in which case I think for the immediate future things look just fine.
    Nov 4 05:41 PM | 1 Like Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    As I said in the article, there are a lot of other factors at play here. The quote referenced is in relation to the lead / lag impact of new car sales on churn.

    If you go back to 2008 / 2009 it could be argued that the installed base of cars with satellite radios was a lower percentage and thus the effect of the current sub buying a new car and moving from paid sub to promo was diminished in comparison to today (and in the future).

    Again, many factors at play here and the number is not broken down so we're limited to guesswork as to what makes up the number. How many cancel for financial reasons, how many cancel due to dissatisfaction, how many cancel due to selling the vehicle, how many of those roll into a new car with a promo sub, etc etc. So long as it is kept within company guidance of 1.8 to 2.0 I see no reason for alarm, and even outside those parameters (both positive and negative) one should dig a bit into what's at play and understand the potential impacts of various activities on the churn number and then make a decision.
    Nov 4 03:44 PM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Thanks bass and good to hear work has had you busy! That's a good problem to have (well... usually !).
    Nov 4 12:01 AM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Thanks Sco !
    Nov 4 12:00 AM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Thank you bluesit :)
    Nov 3 11:59 PM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    "We will have the answer nest quarter."

    Yah? Is it gonna be brought in by stork? ;)

    Kidding aside, "you missed my point" is fun to say but your point, gathered up all neatly in three brief sentences, was nonexistant. Resulting average Jul / Aug churn is 2.02 %. It's not a huge concern as you make it out to be. It's a fluctuating number as I illustrated and a longer term average is necessary. This should be PAINFULLY evident by the fact that from one month to another that it can swing a full 2 tenths of a basis point or MORE (the breakdown of Jul / Aug isn't known... maybe it was 3.0% one month?)

    "Here is the other point you missed."

    It wasn't included. If you wish to include "points" then you need to state them, not say what you did and then expect the few who read the comment to fill in the blanks.

    "SIRI will add 1.8M new subs this year per Mel. One million of those subs will come from used car sales."

    SIRI has *guided* 1.8 M. You know their guidance is rather low. You're not stupid :) so don't play ignorant. You absolutely can't say 1 million will come from used cars either. But again, you know that.

    "That means new car sales at 14.5M units only produces 800,000 new subs. Any slow down in new car sales and those subs evaporate into thin air."

    Well it's a wonderful thing that new car sales have been and are expected to continue to be, accelerating, then, no? And in case you missed the part of the article that discussed it, churn would be decreased by lower auto sales based on the fact that it's a leading factor on the numerator while the sales are a lagging factor on the denominator. If 0 vehicles were sold next quarter and everyone kept their cars, churn would grind down extremely low because nobody would be switching from net pay to unpaid trial. It wouldn't be a "good" thing for SIRI if vehicles stopped selling but it would bring churn down on the low end for 3 months at least. Higher churn is EXPECTED as vehicle sales ramp up and the fact that it has remained as low as it has even in the face of such things as price increases is exemplary.

    "Finally, SIRI grew will grow its self pay subs by 1.9M this year. Apply the 2.0 churn to this growth and you will see churn will go up by 38,000 per month next year or 460,000 subs in 2013."

    Is it "grew" or is it "will grow"? You're using two tenses in the same sentence. Come on... And why are you applying a full 2.0% churn? It was rounded up from 1.954% actual. You're assuming September was a fluke month, you're assuming new / used demographics, you're assuming a slow down, you're assuming an increase in churn, etc. Basically you're assuming that everything is "the worst" and EVEN THEN as you state, sub growth will come in at 1,350,000 additions. Even in your doom and gloom worst case scenario where you apply bearish bias to every facet of your argument, SIRI exhibits growth.

    "If you doubt my numbers here are some facts. In 2011 car sales were 12.8M and SIRI added 1.7M subs. This year they will be 14.5M and subs only increased to 1.8M."

    Again, to date SIRI has added 1,472,559 new subscribers (net). So you are saying that you are certain they will only add 327,441 new subscribers in Q4? Get real. You're using low guidance to paint a scary picture. Gimme that brush, lemme paint a moustache on your face and show you the door.

    The fact of the matter is that Q4 is historically one of the best months for subs and Q3 one of the worst. If we use history as an example and historical low guidance as an example we can easily pull close to 2 Million as the expected number of subs this year. IF subs increased proportionally from 1.7M at 12.8M sales in 2011, and 2012 comes in at 14.5M sales or a 13% increase, then applying a 13% increase to 1.7M yields 1.925 M expected year end sub additions, or an increase of 453K in Q4. Given that Q3 added 445K and Q4 has historically brought in more, I'd say...

    SIRI IS IN GREAT SHAPE.

    Looks like you have problems with your scare tactics once you're forced to elaborate, hmm? At least you can be vague again in your Sunday comics.

    And thanks for the next article idea.

    Sincerely,

    Little Stevie Wonder
    Nov 3 11:58 PM | 2 Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    bass... hadn't seen you post in a bit! Was concerned everything was ok with the storm and all (not sure if you even live in the area hit?). Good to see you :)

    And no idea how they kept questions away from certain areas... I'd assume they said don't ask. Very strange indeed :)
    Nov 3 02:34 PM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    "Churn, as I understand it, is a number that is completely determined by the change of receivers in use and in no way can tell what was changed in subscribership. If I am mistaken, please let me know."

    This is correct.

    I am not sure if they categorize cancellations as suggested. When I switched radios they just cancelled the old, turned on the new one, and talked me into the yearly all access plan (I had been monthly sat. only before). Then I got about 50 things in the mail over the past year saying please come back to SIRI on the old radio. Obviously that is something that need to change... how much did it cost them to send me all those things asking to come back? $25? $50? Probably somewhere in between... that number multiplies into a monster if they do that for everyone who simply switches vehicles or radios.

    "I actually expect the churn rate to have a jump coming up shortly. With all of the cars that were damaged or destroyed with the storm that just hit the northeast, I would expect a larger number of those to have a Sirius XM radio that will no longer function and/or will be traded."

    Yes, good catch, and something to expect in the next call. It will be interesting to see what the impact is. If churn goes up but auto sales don't move up in proportion that may be an issue. I don't expect more than a 0.1% movement in churn though regardless.

    "Personally, as long as the overall subscriber numbers are increasing significantly quarter after quarter, I couldn’t care less what the churn rate is listed as… especially if there is no context for the number."

    It's a good number to watch on a moving basis, but really one quarter's reported churn should not be cause for immediate alarm. It's the trend that matters combined with a lot of other factors. As I said in the article as time goes on churn should probably increase gradually given how it is calculated simply because more currently installed radios get swapped out for new cars or "other" used cars. Where it is right now is healthy.
    Nov 3 11:04 AM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Thank you but don't go too far out there.... 2.2 or 2.3 without a serious explanation averaged on a 3 month span would certainly be cause for concern! :)
    Nov 2 07:49 PM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Haha... ;) good show!
    Nov 2 04:47 PM | Likes Like |Link to Comment
  • Spurn That Concern Over Sirius XM's 2.0% Churn [View article]
    Responded to it above :) I honestly have no idea how lifetimes are figured. Good question.
    Nov 2 04:47 PM | Likes Like |Link to Comment
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