As often as I have pointed out the times I have made correct calls on Sirius XM, I feel compelled to admit my mistakes as well. Let's start the "misses" off with a recent article in which I suggested Sirius XM could be introducing an ad supported format to supplement their premium subscription model. Actually, I did not suggest this so much as Greg Maffei of Liberty did. I simply reported on it, and introduced technological evidence that it could in fact be done. When questioned by Barrington Research's Jim Goss on the subject, Mr. Karmazin replied:
...We like our business model and we think that the subscriber revenue is a very important part of it, though we do reserve the right, obviously, as years go on and as more and more subscribers are out there to consider having an advertising driven business, separate and apart, as well.
Strike one! Another article I had written dealt with Sirius XM's proposed shareholder rights agreement in which I suggested that Sirius XM could potentially be lining up a potential suitor. Mr Karmazin was kind enough today to acknowledge me today with the following rebuttle:
There’s been some confusion on the part of some reporters, as well as some investors, about our decision last month to adopt the shareholders’ rights plan, commonly known as a poison pill. If a third party were to acquire more than 5% of our stock, when combined with the Liberty Media transaction, that could push us over the 50% threshold that could trigger a change in control from an IRS viewpoint. That would risk our losing a significant amount of our net operating losses, which is a very valuable asset of the company. That is the sole purpose of the pill and it is not intended to stop anyone who would be interested in a transaction with the company. - seeking alpha
I guess I got that one wrong, also. Hmm? Did I? Continuing with my personal soul cleansing, I have saved my greatest "miss" for last. I am especially ashamed of this one, because I allowed my opinion to be swayed by people around me, rather than the data. Back in early March, I wrote an article in which I made the claim that, if the first two months of 2009 auto sales data remained at those levels for the year, Sirius XM would end 2009 with a net loss of 2 million subscribers.
I took a beating by critics, many of which today I can call friends on that call. A few weeks ago however, it was brought to my attention (to put it lightly) that even "the people at Sirius" think I'm a moron for having made such a claim! I took that to heart, and decided to look at potential ways in that Sirius XM could have improved upon my results. Perhaps I was wrong, I thought to myself! Like a man sentenced to death, I walked right into that one and wrote two articles describing potential ways that Sirius XM might have avoided negative subscriber growth in the first quarter! Strike 3!
Ironically, if we extrapolate the first quarter numbers and extrapolate them to the remainder of the year, we end up with 1.6 million net lost subs as the current rate. (400K x 4). Interestingly of note, is that the March sales data seems to have resulted in a 400k subscriber recovery from my original thought.
I'll keep the "hits" to just one to end on a positive note. On Tuesday, I warned traders and investors to be cautious in chasing Sirius XM into earnings, as I expected a potential sell off to occur if results fell short of expectations. Hopefully, if at least one person heeded that advice, I will condider myself forgiven.