Fool's Worst Stock for 2007: Sirius Satellite Radio
Ouch ouch and ouch. The Motley Fool has declared Sirius Satellite Radio (SIRI) the absolute worst stock to buy for 2007.
Of course, they are quick to point out that Sirius won Fool's Stock Madness 2005 (hey Fool: I appreciate the linkage by the way!), but attributed that win to be more based on the voter's hearts rather than their wallets. It's undeniable that both satrad stocks are filled with egos and devotion of an almost maniacal fervor.
Fool ends with this as their final qualification:
Even if Sirius does generate a cash profit this Q4, it's still burning through cash at the rate of $550 million over the course of the other three quarters. That means the company will need to continue piling on the debt, or diluting its shareholders with stock issuances -- or both -- to keep its operations running.
They may have a point with this one. Yes, positive free cash-flow is definitely possible (even likely) for Q4, because subscription prepayments are heavier around the holidays. But remember that there's associated expenses with these prepayments (like retailer commissions) and these are paid out in Q1.
But the worst stock for 2007? I'm willing to bet there's others more worthy for this distinction.


Comments
So much for the Mel will solve everything cheer squad. Apparently costs do matter. To paraphrase a well know owl, "How many stars does it take to get to the center of a massive debt?"
Posted by: History Guy ? | December 21, 2006 11:11 AM
I guess we should have caught on to the inherent bias of this blog when you posted your story about the "Stern Effect" ending with the arrival of O&A to "Free-FM", but did it occur to you to also post the Fool's story about XM being the worst stock for 2007?
I mean, why would you only post the story concerning Sirius and not the one claiming XM the worst stock for 2007?
Posted by: rjr | December 21, 2006 11:17 AM
While he does raise valid concerns, I find it hard to pick any one stock as the "worst" for the coming year. It will certainly be an interesting year for both companies...starting with this quarter.
Posted by: iband | December 21, 2006 11:31 AM
I guess Ryan felt it unnecessary to mention that Motley Fool also called XM the worst stock for 2007.
Please see this link.
http://www.fool.com/investing/general/2006/12/21/the-worst-stock-for-2007-xm-satellite-radio.aspx?source=eptyholnk303100&logvisit=y&npu=y&bounce=y
Lets keep it even here!
XM and SIRIUS...worst stocks for 2007.
Guess Panero isn't any better History Guy!
Posted by: Anonymous Coward | December 21, 2006 11:47 AM
I actually missed that Anonymous Coward. I'll gladly write up about it. Thanks.
FYI - if there's something you want me to take a look at, I'm easily approachable by simply emailing me.
Posted by: Ryan Saghir ? | December 21, 2006 12:09 PM
To the coward:
Neither I, nor almost any XM fan, have praised Panero's leadership. Nor have XM fans been lauding Panero with praise such as "Panero will destroy Sirius", "Panero can not lose", or "Just watch what Panero pulls out next".
Nope, you just do not see those posts. Yet, we hear this all of the time from Sirius fans (or should I say Howard fans since he is the guy that has pumped up Mel's "supernatural" managing ability in so many of his fans' minds).
If you can not see the difference I cannot help you.
Posted by: History Guy ? | December 21, 2006 12:18 PM
Several things I find concerning about both the XM and Sirius "worst stocks of the year" articles from the "Fools" is that they neglect to see how close XM is to sustainable CFBE but they point out how Sirius can be close for Q4 only. They miss the longer OEM trial period from Chrysler and how that effects ramp rates, They fail to see the Stern effect but prefer to note declinging subsciber additions, And worst of all from suposedly finantial experts, They fail to see how XM has been deleveraging debt and refinancing to unsecured debt. Granted, until one or both companys become profitable this means little, But from there foward XM has a huge advantage.
Posted by: jeff | December 21, 2006 12:29 PM
If you think this site is biased against your interests, don't come here. Personally, I think this is a great site that provides very up-to-date information about both XM and Sirius, whether the news is good or bad. While I prefer XM, I enjoy reading about both companies -- they both need to survive for this industry to survive.
Thanks, Ryan, for hosting this site.
Happy holidays to you and yours...
Posted by: iband | December 21, 2006 12:34 PM
Okay XM fan, relax there. There's more than enough reason to value Mel, and to reference an earlier comment, these stock articles, which don't focus on Mel, are all about SIRI, not XMSR, which is gradually becoming irrelevant. Don't you guys have more subscribers already than we'll need to break into the black? Don't we still have an extra satellite on you? Isn't our net subcriber count always higher and our churn rate lower? What exactly is going on with XM?
SIRI really has to replace whoever is in charge of publicity. Mel Karmazin and Howard Stern both command their own media appearances, but Sirius on its own bombs out. The only plug that comes to mind, besides all these negative stock predictions, is the pretentious article about Sirius's founder/owner's (whoever he was) opulent home, which only breeds resentment in the general pop.
Their B2B relationships are strong. They did get Radio Shack to feature them in their advertising, along with Chrysler, but their general publicity blows!
Later
Posted by: Stern Fan | December 21, 2006 12:35 PM
Stern Fan said "Don't we still have an extra satellite on you?"
Not that it matters, because XM only needs two for complete coverage and operation, but XM has 4 satellites in the sky now to Sirius' 3. Two are back-ups. If Sirius lost one they would be FUBAR.
Posted by: BigMoola ? | December 21, 2006 1:45 PM
Two are backups because they are about dead. They were already failing which is why the other two were sent up. XM has a fifth being built, and Sirius has a fourth and fifth (after 4 is done) for backup as well. "rock" and "roll" are done.
Posted by: Anonymous Coward | December 21, 2006 6:23 PM
jeff said:
"Several things I find concerning about both the XM and Sirius "worst stocks of the year" articles from the "Fools" is that they neglect to see how close XM is to sustainable CFBE but they point out how Sirius can be close for Q4 only. They miss the longer OEM trial period from Chrysler and how that effects ramp rates, They fail to see the Stern effect but prefer to note declinging subsciber additions, And worst of all from suposedly finantial experts, They fail to see how XM has been deleveraging debt and refinancing to unsecured debt. Granted, until one or both companys become profitable this means little, But from there foward XM has a huge advantage."
Well said. XM has an advantage, but not a huge one by any means.
Keep in mind that both companies are here to stay. Whether the stock tanks or not, some other company will swoop in and buy them out if need be. The companies offer a lot of potential to a buyer.
I just wouldn't be holding any stock on SDARS for a while. They are still burning too much cash.
Posted by: SatelliteRadioFan ? | December 21, 2006 10:06 PM
BigMoola, if Sirius lost 1 satellite they would not be "FUBAR". do some research before posting next time!
Posted by: Philmore | December 21, 2006 10:10 PM
Orbitcast is bias? PLEASE. I haven't seen a more UNBIAS blog out there. I'm a huge Sirius fan and I dont see this place being bias at all. Whatever, if you cant deal with different opinions then sit at home by yourself and dont talk to anyone.
Motley Fool sucks btw. SIRI is a STRONG BUY in 2007!
Posted by: xoxo | December 22, 2006 9:11 AM
Stern Fan, "no" to almost every question you asked. Mel is a carnival barker and anyone who takes what he says as the word of god is just a fool.
Posted by: PFreak ? | December 22, 2006 11:19 AM