sl62

Circuit City's Potential Buyers Offer Hope for Sirius Investors

TPoise...

Thanks for that info. I never knew that. But I can certainly verify. I went into a CC in December to hopefully get a deal on a mouse and the people working the store were very funky. I walked out, (not knowing they were replacements) saying to myself, no wonder they went BK. Too bad. CC used to be pretty good back in the early 2K's. I bought a custom-built Compaq through their in-store kiosk at the time. Good times gone bad. And just goes to show how unpredictable the market can be. Today they closed @ .33 in the Pinks as a company with a case number. Plenty of people betting on that sale of themselves. But here SIRI is not in BK but with just the threat of it over them and they closed today @ .13. Funny stuff!

Circuit City's Potential Buyers Offer Hope for Sirius Investors

btw...

3Mo Libor is 1.16 today. I've heard predictions of under 1% sometime this month. This helps ARMS, HELOCS and borrowing of any kind (including corporate!)...

Circuit City's Potential Buyers Offer Hope for Sirius Investors

OKMONEY...

Thanks for the intelligent exchange. IMO, this is the good part about blogging...

I still rmember buying SIRI @ .76 in 2003. Though I have not been a consistent holder of the stock since then. I've gone in and out and got in again recently right after the revalue...yet have still taken a significant hit averaging all the way down.

Well, your thoughts are not without some merit though I'm expecting that you will be at least a little wrong. And at very least, I'm expecting SIRI to win a few more battles near-term though in the end they may well just lose the war (debt). I think many investors would welcome even a normalization of the common somewhere approximate to the revalue number. I think if a few of those short-term battles are won, we could see that due to how this stock has been so beaten down. There are many "unnatural" forces at work behind the secenes (the hedge short from the buyout deal (MS, UBS) and the current 260M short interest) that if normalized would produce a desired effect and encourage some new money optimism. Even though the hedge is related to the 2014 Notes, it is the manpulation from it that would relax (albeit temporarily as buying/covering pressure became too great). Obviously, the short-term battle at hand is the 2009 debt appropriation. With no debt due in 2010, if they can work a little magic, that battle can be won while keeping the platoon in tact. And if that happens, there would a cease fire/respite for the time being and would allow the company (and it's common investors) to catch their breath. Since the buyout in late July, neither have really had a minute to breath clean air--it's been nothing but smoke.

I agree with you 100% that this is a formidable war they are in. And the end of which potentially will not be determined until 2014. Between 2013 and 2014, they have something like 1.5B+ of debt due. As you say, the next few years will also determine whether SatRad really is "just a luxury" or will it become more mainstream. At the moment, I see many organizations leaning toward the latter. CNBC adresses their SatRad listeners from time to time, they are a big presence in all major sports (as in the Chicago Winter Classic @ Wrigley I attended), et al. Yes Autos are contracting, but keep in mind, the company's saturation in all Autos is only 50%. Even if Autos contracts another 25% (which would be next to armegeddon..more like 10%), if SIRI's saturation increases 10% into their extra 50% metric headroom, it will at least offset that volume decrease. But the fact that they have such carpet exposure to Autos (where consumers mainly still listen to the radio), it at least keeps them stable until they can grow the "portable" side of their business model (and hopefully put their vast bandwith spectrum to work further). So my take is they are not as badly positioned right now as some might think.

All your points about BOD feduciary to the survival of the biz, valuing talent/sports contracts, the plight of potential protracted economic downturns, et al, are all valid and I agre 100%. None of us know exactly how this year or the next few will play out. I like your analogy of the infantry. Loser dies but winner gets to fight another day and keep from being the next loser. That's the mentality we all have to have. We can do two things: give up and say we've had it and let the enemy have at us at will, or we can keep fighting and survive until we win. Then we never wind up playing the part of the loser. I hear a lot of people these days saying, "that's it, we're cooked, it's over, hands up I quit...". When exactly did the U.S.A. adopt that new motto? The only motto I've ever known is things get tough...but when they do you fight like hell to make it right (or less wrong to x degree...as nothing is absolute or perfect). That's what I plan on doing in the face of economic trouble and I hope more people will do the same rather than just say, "it's real bad, the world is over, I'll be locked in my closet if you need me". I sense SIRI will do the same. They owe it to themselves and all parties concerned to fight this until they can't anymore. Hey, it's easy to file. All you have to do is get a case number, right? And poof, all my debts are gone! But that's the easy way out. I see that as the ABSOLUTE last resort for this company...and I see plenty of ammo still in their shed. I hope they will use it all. You might call me unrealistically optimistic. But truth is, America took the same stance in the early 40's...and I'm sure we're all glad that was the case or this world would be mighty different today. Going down fighting (while still spraying bullets with finger on the trigger) is always better than just giving up because things look bleak...IMVHO...

Circuit City's Potential Buyers Offer Hope for Sirius Investors

SJAmes6621...

I'm curious...you said you made a wise decision not to buy CCTYQ @ .10. They closed @ .305 on Friday, just up .14. Probably on this news Tyler is reporting. But I've been tracking the stock..they went into the Pinks @ .06 (typical BK price for most common I've witnessed over the years) then jacked to .30 a few days later with the short unwind (also very typical). If you were in then, that was the out... but since then, they have actually maintained at about .15. Then Friday they shot up again on the news. If you were looking at .10/.12...Oh, I just realized you said 1000 shares. Yes... a play like that requires at least 10K+ shares to make something worthwhile. But as such, it's not a bad VERY short-term play in similar situations. .30 is very common before it may then just pull back for good. Sorry..nevermind...I answered my own question to you.

Circuit City's Potential Buyers Offer Hope for Sirius Investors

OKMONEY...

Apologies here too. Obviously if i knew you more I would have gotten your humor...I took it the other way. Sorry, it's been a trying day and thanks for the detailed insight...much appreciated. That's why I post here, to share opinions and knowledge with others. I had the feeling this was your area of expertise.

Hmmm. See your points but I'm going to go out on a limb and still believe that SIRI can get around a formal Chapter event. For a few reasons. See what you think of this...

1. As a specialty content provider, I see them needing to be a bit more careful with reputation and stigma. CC is more of a classic candidate having a lot of brick and mortar and inventory to contend with. As the other poster said, a classic case of over building, then having the floor fall out on top of it...and having the credit card revenue made it easy to mask the other failings of the business execution. Pure B&M retail is a tough space due to trying to properly regulate expansion, so a company like CC filing doesn't surprise me (esp. having to compete with a behemoth like Best Buy. SIRI of course a different model yet plagued by similar over leveraging (talent and now acquisition). Of course as said, if they absolutely need to file, they will regardless of rep, but my take is they will avoid a Chapter at all costs. In addition for the same reason GM did not want to. Look at what happened to GM sales THE MINUTE BK was off the table. Consumers started buying with confidence and increased sales were reported in the last part of Dec... Before that, that's the only question consumers were asking salespeople. "Is the company going out of business?" (which is the stigma with any kind of official Chapter filing, IMO). Granted a SIRI sub is not a car purchase, but I think the concept of BK would be alarming to existing and near-term sub base. It would be messy and too much money wasted on damage control. They already tread water IMO with marketing efforts and convincing consumers how great their service is or why they need it. So I'm wary there.

2. Q3 was encouraging and by the increased guidance they released at the meeting, I have to believe Q4 will satisfy the Street (and the point also mentioned at the meeting on their PPT..other potential investors in the company--a la Buffett's Preferred in GS). I do recognize on the latter point that Buffett got 10% and that's the kind of action SIRI is trying to avoid having to pay.

3. I don't know for sure what CC's recent store sales were like prior to filing, but I think I recall they were down overall, and for some time. That was my point earlier about what companies file and which ones don't (necessarily). SIRI's in a different spot, their sales are strong and appear to be maintaining that strength. If churn maintains in Q4, it will be a big positive and support their case for further strength. I realize this has little to do with their ugly debt load proper but it may make a difference with different new funding options/renegotiations...

4. The approved additional shares from the Proxy. Up to now, they have been exhausting their previous approved common in debt for equity swaps. The 2 1/2 Notes due in Feb are with GS. It appears at least that GS sees future value in holding this common (or wouldn't it make sense they would want no part of accepting common shares?). If I were a bondholder at this stage, at this low price and good company metrics, why woldn't I accept equivalent shares for some or all of money I'm owed and hold the shares expecting even more return when the value increases? Why do I also believe that GS has been already assured by the company that a Chapter event is not happening...thereby assuring that this common will remain in tact? You might say well, GS is just taking the shares directly to market for their cash...but by the recent action on the stock, I don't believe that to be true. In the end, having the additional common to work with, I think it gives them just another tool to use. I believe that at .14 much of that dilution is already baked in. The Street so far seems to view this protocol as a positive.

5. Said renegotiation outside of a Chapter with bondholders and bank facilities. Some here, including me, believe the Feb debt is a no brainer at this point. That leaves the next hurdle in May which is a bank facility (I think 300M). The potential there is by showing solid positive metrics post buyout, they might be able to extend that principal. My take is at least a year since they have no debt due in 2010. Dec. 2010 would be optimal IMO and would give them plenty of time to properly address it. Then the remainder of the approx 1B that was due this year is in Dec. Again, nearly a year away yet, it gives them time to work on exactly the best way of addressing that (and in a we all hope a much better environment than the Oct-Dec 08 mess was. In terms of renegotiations with bondholders outside of a Chapter, I've been keeing an eye on CHTR. That's exactly what they have been doing recently. They have a MOUNTAIN of debt (I think like 20B overall--but on 6B of top line). But BK was recently also priced in to their common recently. They hit a low of .08. Last week they popped up to .23 on renogotiation news. Now it will remain to be seen if that was just a short unwind (which as you know, is common at some point near or shortly after filing), or if there is new traction. Next few weeks should tell us that story. As a similar story to SIRI, I'm keeping my eye on them.

At this late stage, I believe SIRI knows their plan (not meaning the one with the capital P lol!). I think the environment is getting better every day coming off of the freeze up in the Fall. I might be more optimistic than you about how this gets resolved. Your points are taken and as you say towards the end of your post, that is a neat little plan. Something tells me though that it won't be the plan right now (at this time). 2013, and the new buyout XM debt due in 2014 will still remain as hurdles for the company. And that may be a time to reevaluate your scenario. But by then, they will be much more established as the new combined entity and with a much higher sub base (according to currenet guidance). It may just be necessary at that time. My take is for now, is they will be able to create enough breathing room for all involved so that things can normalize a little and they can get back to focusing on growing the business. IMVHO...

I'd be interested to hear any further thoughts...

Circuit City's Potential Buyers Offer Hope for Sirius Investors

Ok, Mr. Okmoney...

What is this irritate sl62 day? I see you've picked out the fraction of my post (OPINION not PAID-FOR CONSULTATION AS AN EXPERT) and gotten cute. Why? Aren't you intelligent enough to raise an issue you might have without being a total A-Hole? Apparently not. Cram down assumes the case is already assigned a number and a plan has been created. I never went that far sir. My comment alluded to that GENERALLY, companies that still have robust sales and not seeing a downturn in business are not the ones filing for bankruptcy. SIRI's challenges at the moment are too much debt (AND much of it causing the issues just taken on 4 months ago), not top line/ slumping sales. Had they reported slumping sales in Q3 (didn't) or upcoming Q4 (by the numbers being raised at the recent annual, won't), as said, BK might have already been filed out of sheer necessity. But to the contrary. And IMVHO btw...as I must be clear with you.

So, what, are you BK lawyer or something? If so, you're a horrible communicator. But also if you are, your opinion would be valued...if only you knew how to communicate it. Instead you derive more pleasure on being a joker.

Circuit City's Potential Buyers Offer Hope for Sirius Investors

Good report Tyler. I, for one have little doubt that the debt won't be properly addressed. Credit is unfreezing, rates continue to decline and lending is happening once again. Had all this credit BS not happened this year, the debt would already have been addressed by now. Just as Tyler states for CC, and which SIRI detailed in their annual meeting PPT, they are looking for new significant investors (or inwestors! lol). Trouble has been even new investors need access to credit or they at least need some proof that the economy is somewehat stable and not ready to implode into dust. We all have to realize that many were waiting until '09 for a new time horizon on the books to begin making investments in earnest (and for proof of stability). In the market, the January small cap buying effect is easy to see. Money is flowing again and will only get better from here. One aspect of Tyler's report is very important so I'm calling attention to it.

>>Circuit City filed for Chapter 11 bankruptcy protection this past November amidst slumping sales and a slumping economy.<<

Key phrase there is >>amidst slumping sales<<. This is why a company, any company would have reason to reorg in the courts. When youhave slumping sales, you are DOA. you have no chance. And that's the difference in SIRI. Their sales are not slumping, they are the opposite-- robust. Companies with robust sales do not file for bankruptcy. Some people here think anyone or company can just decide to file to hide from things like debt issues. Not true. A judge would catch that immediately and ask the company "I see you have great sales, why are you filing?" If the only answer is duh, we took on too much debt FOUR MONTHS AGO, the judge would laugh them out of the room and would be denied. They would be ordered to go make it work...or have them arressted for being stupid. Believe it. If SIRI was going to file for BK, it would already be done. But they haven't because they know they can't, let alone don't have to. Instead, thery're doing what they are supposed to do. Work it out.

Trouble is A-holes like the guy who just crashed many regular posters' ratings here, can't see past their frickin noses and are too impatient. That's not how it works DB's. Sometimes you have to wait a while before corrections are made. The fact that I even have to say that to you makes you a pimple. Get a life!!!!!

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

Well said Cos 1000...

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

WTMBS?..

My answer to that would be the following:

1. Be a little more transparent about the ugly financing to shareholders up front. It's all true that they released the deliterious info (albeit buried in the middle IMO), but something more akin to the Oct. supplement would have been helpful upfront (putting more of the financing explanation towards the top and in the open). Beside the the different legalese prospecti from the company, crazy Cramer actually gave us more valuable info than the company ever did.

2. Even one open letter to shareholders along the way would have been appropriate. Just to show support as we got our arses kicked week in week out. Many CEO's do this in times of company turmoil such as a stock price crash. One such comminication would have been nice and it could have even have come along with the Proxy, explaining the situation from the comcpany's standpoint.

That's about it. Then I would have felt more on an even playing field. I don't blame Mel at all in the big picture (which was my original position). Mel is Mel and he's a different sort of guy. But I think this situtuation is not exactly normal in many ways (doing an all stock buy-out with so much IB bondholder financing). So just a little more address to enable shareholders (as much as possible while still allowing them to make their own decisions about risk) would have been in order, that's my take.

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

Cos1000...

I left a link on the other article regarding Q metrics but I see someone pasted in above. Cash, etc...so disregard over there...

Hey, let's see what tomorrow brings. I think we just got the "one small step for man" tonight...now we hope the "one giant leap for mankind" isn't too far behind!

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

JustAnotherLoser...

I'm just curious...what would youhave Mel and Co do about MMs/SP? That's not how it works, with due respect to you. You've got to go read all the prospectus supplements to understand what the deal is here. Then you will see why the SP is what it is and what happens to it on a daily basis...IMHO.

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

If I were opining a guess on why the Q4 subs were knocked down, it might be taking October into account. Though it is traditionally a prolific Q, don't forget most everyone was preoccupied with their shrinking 401ks last month rather than signing up to SIRI. Plus, holiday season this year is a wildcard. Just a thought..

Hey. I think this Q report is is a decent surprise for the most part. If it proves to be received well next few days..a huge hurdle. Wed. they combine streams and if they can get that debt worked out in the next few weeks, they will show solid control of the future of the company/more tangible progress. I still think when TARP money gets to autos, there will be a nice pop. I say, let's go SIRI. Do something for your shareholders asap and lets get moving. We've certainly taken it "up the doo da" long enough! If .215 remains the low through Friday, watch for heavy short cover bottom recognition soon. As many of these things that can happen within a general vicinity of one another...the better for the long position.

Another thought. I wonder if the heavy stock price disparity (good will write down) was counted on all along? It could explain a few things...

Circuit City Bankruptcy May Help Satellite Radio Inventory Levels

relmor...

I agree. Decent report. Jokers like Wall St24/7 wrote a ridiculously stupid article but reputable agencies like REUTERS spun it positive--which it was. They've got to do this financing deal asap--which will help the stock and make them less of a Wall Street whipping boy. Mel said in the call..."in short order" about the financing. Let's see if he follows through.

I went through with 10K shares and bought 5K more during the call--like you said, I couldn't resist. I think the bottom is in and will soon begin to trend higher. If shorts think this is it, soon a covering frenzy could begin. We'll see.