SIRI stock now under a dollar, when will this end? - Orbitcast

SIRI stock now under a dollar, when will this end?

| 33 Comments
SIRISirius XM Radio Inc. shares continue to take a beating on Wall Street, a day after the company issued its updated guidance. And of course, the analysts are opining on the subject with opposing views.

J.P. Morgan
Barton Crockett repeated his Neutral rating on the stock this morning, cautioning of near-term issues that could continue to weigh on the stock - including debt issues and the weak auto and consumer markets. Crockett was sure to note that Sirius believes the $400 million in cash the combined company had at June 30 will not be enough to pay off the $300 million convert due in February. Therefore, the company is looking to do some additional borrowing.

RBC Capital
David Bank this morning repeated his Sector Perform rating on the stock, with target on the stock remaining at $2. Bank asserting that there are still plenty of risks, including a challenging consumer environment, merger execution risks, the refinancing overhang, a lack of visibility into longer-term fundamentals and multiple-based support for the shares given the early stage of its EBITDA ramp... to name just a few.

Citigroup
Tony Wible this morning cut his target on the stock to $5 from $6.50, but still contends the stock is "massively undervalued" given merger synergies, revenue growth from new plans and greater OEM penetration.

Stifel Nicolas
Kit Spring today repeated a Buy rating on the stock, but cut his target to $2 from $3. But let's forget about his thoughts that the new guidance was "a net negative" - Spring actually raises the prospect that the company could go bankrupt: "Downside is potentially to zero if SIRI can't refinance its debt nor sell the company - a scenario that we believe is plausible in the current environment, but looks to us to be a low probability outcome," he writes. Yikes.

At posting time, SIRI is down 16.4%, or 19 cents, to 95 cents a share.
 
[Barrons]

33 Comments

I have been watching the Yahoo Finance bid and ask numbers for SIRI all morning. Unlike the usual hundreds of thousands of shares being bid and asked at one time, this morning the bid and ask numbers and changing constantly. This morning there are bid and ask numbers mostly in the hundreds or thousands (i.e., 300 or 3000). So, it would seem to me that the institutions are not being shaken out, nor are they buyers today. It looks like individual investors are the ones buying and selling today.

Anyone got any insight on this?

"Downside is potentially to zero if SIRI can't refinance its debt nor sell the company - a scenario that we believe is plausible in the current environment, but looks to us to be a low probability outcome..." this is definitely true... I have been at a company in a similar position (billions of dollars of debt) and they couldn't secure refinancing... they had to file bankrupcty, renegotiate their debt, effectively washing all current shareholders equity, and eventually the company was bought by a much larger competitor (after the balance sheet was clean). The little investor will have no weight or concern in this scenario, it'll all be about the finance guys (banks, etc...).

If only I had a few million dollars right now......

Gonna be A LOT of unhappy XM investors (and listeners) when this thing tanks...

why just unhappy xm investors? won't siri investors be unhappy as well?

Why is Mel taking a long time to merge the two companies, and what I mean by this comment is as following:

- Name is misleading. Sirius XM. Just come up with one single name and not both. Although I guess this is probably because of the technical issues of broadcasting Sirius/XM on either a Sirius or XM radio.

- Why is it taking long for him to clear out some of the weight of both companies.

- Why isn't some shows like Howard Stern or similar programs offered on both radios already.

- Maybe there should be incentive of signing a 2 year agreement Sirius XM will throw in a radio for free, etc.

- Why two websites? why not join it to one website? Even if you are going to support both XM and Sirius why not have one website? it is sort of a disconnect for users.

I just think Mel hasn't done enough so far to reasure investors and give them a light at the end of the tunnel.

You all got what you deserved. You all begged and cried for this merger, and now the stock tanks.

Reminds me of what happened years ago when they were crying for deregulation of FM to bring us more choices, more competition, etc. Same thing happened here.

But we won't see most of the programming effects until later.

I would have thought Ryan could see through this, but it appears long ago he bought into this stock and has seen nothing but dollar signs since. Shame too, because this blog used to be really good, now its nothing more than a slow news aggreator.

Can't wait until Sirius XM DOES turn into the next Clear Channel like Mel wants, because I'll just be coming back here to say "I told you so" when that happens.

A win for NAB?

worst stock ever and I fucked up.

I'm almost in the same boat mnxmfan.

I don't want to be the one saying "na na na", but this is why I left the stock(s) in '04. Too much spending too fast and too little revenue. I also knew that if they merged it would get worse before it got better.

I certainly hope Mel wasn't planning on selling this early. He's better than this.

I'm curious to see what some of the other experts have to say: Homer, Stack, Plowboy?

Well, other than the insults hurled at Ryan, I think you are basically correct. They will have to go get more money, which means they are going to issue more stock as nobody I can think of is going to lend them money. They already have over a billion shares outstanding, to raise the hundreds of millions of dollars needed you are looking at hundreds of millions of shares. Guranteed to send it into the penny stock arena. I dont know if they can maintain their Nas listing either, it may be heading into the pink sheets, and thats one step out of the grave.

I think a reverse split is inevitable in a final attempt to get the price up and the share count down. This will come after the refinace, or right before it. After that, I dont know if the revenue will support a higer price and a bankruptcy is probably more likely than before. After all, it would solve a host of issues. It would wipe out the existing shareholder base, it would allow contract renegotiation and possibly elimination, and it would let Mel and his cohorts reset the company. After that it can come back with a chance to be managed properly and survive.

I think Mel, Cramer and GS are in this together. I believe Siri is shorting it's own shares too. i don't think it can be salvaged...15-20% chance.

Fire everyone at XM, sell the DC office, merge the stations, and create the best radio on radio.

You CAN'T run 2 failing businesses.

until this happens, you won't see an increase in subs or cash.

I've seen mergers from the inside.

You guys are being very simplistic when it comes to how quickly Mel and Company can handle mergers.

Name: They may be one company but it's two services. Time Warner still has Time Magazine and Warner Bros as divisions. You can't expect a division to be renamed.

"Dead Weight". Man, have you ever seen two companies try to merge things like exchange servers, different IT staffs, accountants, etc, and come in on time. I bet you haven't. It is not easy and takes weeks to months to pull off under optimal conditions.

Howard Stern et al--they have answered that, it will be available in October for a special fee. That's the short term solution. It is not easy to synchronize such content, for the same reason I mentioned "dead weight".

Websites--I'm sure that's being done, but that's a big project as well--both sites have huge content management systems. Plus, regardless, they still have different content and will have for a few while.

Stockholders may be important, but there are two truisms that have to be obeyed at a higher level.

1) Don't piss off the subscribers--they are what's most important. You have to keep both the XM crowd and the Sirius crowd happy. Disruptions in service or sudden changes can suddenly increase cancellations.

2) Operations must be kept intact. Don't disrupt day-to-day regular operations to jam a merge. You need to make sure you won't have service interruptions, billing problems, etc.

um, yeah... simplistic, huh?!

IT'S SIMPLISTIC!

Funny you bring up Time Warner! The AOL merger worked out great, didn't it?! The reason why it didn't. They didn't act quickly enough in letting go thousands of people, making huge cuts and getting back to business. They made it personal and protected managers and top executives. When TW took over, the first thing they should have done is get rid of about 6,000 people and closed down 2/3rd's of the buildings on "campus". But no, they waited - and spent a HUGE amount of money, because they had it.

SIRIUS does not have the CASH to waste! Nor the time.

FIRE PEOPLE NOW.

Start firing (at least the XM customer service lady I spoke with), and close down non-essential areas in the DC office. It's not like Sirius doesn't know anything about SatRad Radio, unlike AOL and TW. THEY BOTH DO THE SAME THING!!!

MERGE THE WEBSITES.

The websites are huge content management systems? CMS?! You used the correct term, but failed to mention this is the purpose of CMS.

They could merge the sites by now. I know! I have merged much larger systems with much greater complexity. You are kidding yourself.

MERGE THE CHANNELS.

The channels could be merged into one service, no doubt! Mel said it a long time ago - we don't need multiple country channels (on each service).

I, the consumer, NEED one subscription. ONE service. NOT 2 years from now - but now!

The best Radio in Radio (not radios!)

PISSED OFF SUBSCRIBERS...

Don't piss off the subscribers?? I am pissed, and I am a subscriber! There is NO way I can continue to pay for 2 subscriptions when I can get NFL on both (Oct 6th). They are about to lose subscribers from one side or the other! So what's the difference?

If I was so pissed that I would ditch my subscriptions, where would I go? ...to my iPhone? iPod? How do I get the NFL? They are competing with themselves! WTF?

I want the best of both on one radio! That's what the merger was for? Right!? Has anyone asked me if I would leave as a customer?? Have they asked you?

XM was going under! How would the consumers react to NO SERVICE?! This is a cluster f! How are you going to pick between the 2 services as a new customer? (A bit hard to run a marketing campaign) This is so stupid! MERGE THE CHANNELS!

I don't blame the analyst for being confused; I don't get it as a customer!

BRING ON MORE SUBSCRIBERS NOW!

What's most important is being clear, upfront, and honest with your subscribers, and investors. Many subscribers, and investors, thought that "merger" meant - merger!

SiriusXM CAN NOT continue to support 2 failing business models. They just can't. New subscribers are dying to signup, but are STILL confused. Heck, just walk into BestBuy and ask them what they think you should do as a new customer. I promise you, Radio Shack had me laughing for 2 days!

NOW BACK TO AOL

Ask people around you what it would take for them to go back to AOL. Heck, people have not gone back - and they made it FREE!!

Once you lose subscribers (and investors), they are VERY hard to get back. So tread lately when you speak for all subscribers and please think about what 2 radio services, XM and Sirius, are going to do for the next 2 years!

If a company comes along - like Google, and pushes NFL games on new phones (with a new app), you won't get them back! DO YOU GET IT? In this race, it's about time, and in this market, with this amount of debt, who would lend cash to you?

Technology can change very quickly, you may not have the customers to pay loans back, by the end of 2009. We are always an application away from huge business changes, and with all the FCC and NAB stalling that took place, we don’t have a second to spare!

Bottom line, Sirius doesn't have the time, or money, to do this slowly. Other services are right around the corner, and when they show up - you CAN forget about pissed off customers. Things have to happen much quicker, and the "best of" plan should NOT be an extra cost. It should be part of a phased approach to merging the channels.

Ditch one, get one. SIMPLE. (By the way, what channels are going away due to bandwidth issues, when I add Howard, or the NFL??)

You can bet your "bottom dollar" that the 21 million subscriber number may be the highest number we can dream about. You want new subscribers? Well, don't piss off the customers that have not become customers, yet.

Get it done, and quickly. New customers are waiting and may never show up when something else comes along.

Sirius has lost billions in Market Cap and it's time for real change!

Certainly when Sirius XM announces their highest listened to show "Norton & Friends" (now just under three weeks from their expiring contract) has been re-signed this should give the stock a boost.

Why is the stock Down?

OMG.. I can't beleive this question is being asked.

With 1.05 billon to be refinanced most likely at higher interest rates. with Expected Capex for Satellites, With the combined loss of another billion over the next year even after the 425 million in "Synergies" and growh of only 2 million projected. With an unknown Merger costs comming cash layout for the OEM equipment and little in synergies now, Q3 will be ugly. Things look pretty grim.

I have been saying from the beginning the Merger was a bad Idea.

Now I would not be surprised to see the stock drop to the 50 cent range as well as a billion share offering to raise much needed cash before its gone. It will begin to shake out once we see the combined numbers and the actual amount of cash used.

It is a shame though that a product with so much potential was destroyed as a stock. Just wait for 2010 when more of Sirius's old debt comes due. This Crap stor of refinancing is not even close to being over.

I'm not sure what you people expected.

Merging these companies is not a months-long affair -- we're talking years. They'll get rid of the duplicated brands and channels, but they're still going to separate infrastructure for years.

The merger was never about creating a stronger, healthier company. It is about another Hail Mary for Sirius, necessitated by the abject failure of Howard Stern and other bad business decisions.

It is a very long, hard road from here. Not saying it can't survive, but this company is a decade or more from becoming a worthwhile investment, if ever.

You can't just lay everyone off. Every called customer service? It's not good now. Imagine half as many people working to answer 18.5 million customers? Bad idea that will enrage existing customers. Replace "duplicate" channels? Again, what is a duplicate? Just because they are the same genre doesn't mean they are alike at all. Getting rid of channels = pissing off customers that like those channels. Protecting top management & executives? Well, the first thing a responsible company would do is go straight to the biggest cash drain, Stern, and renegotiate his contract but that will never happen and if he were to leave you again piss of subscribers.

Merger was a terrible idea, XM was in no danger of going under. Perhaps Sirius was but not XM. Enjoy your worthless stock shitdicks.

Here is something you XM lovers don't get, Sirius runs this show now. Xm will go away, sooner or later, like it or not. Welcome to the hell of bad managent and aweful executives.

Mel, it's time to make some hard decisions. Fire'em, close DC, merge all the channels, and let's get to business. stop being such a sissy.

If it's a merge, merge!

The consumers will not show up for 2 services, unless it's all for one price.

You're still being simplistic.

1) Fire people. Who do you fire? It's not a question of all the people in one department or another. Redunancies exist in both departments, and you don't just fire people willy-nilly--these are people, not poker chips.

2) CMS. A lot of CMS tools are actually difficult to use, and many people don't use them in house, they outsource. A "merged website" project can take 3-12 months to complete, especially because outsourced vendors aren't going to rush things just because the companies stock price is down. It is what it is.

3) Subscribers: You're still not thinking clearly. Not everybody cares to have both channels. If you've read this web site, the XM fan forums, the Sirius fan forums, etc., there are a lot of fans of each channel. You don't just say to one vendor "ha ha, all your channels are being replaced, deal". Some people don't care about the other service. And they have to make programing decisions based on Arbitron and other factors.

And both companies were at risk. But let's be realistic, if either company "went under", it would be a Chapter 11, not a Chapter 7, which means they might have been bought out by an interested party. SatRad will survive in some form, it's too valuable to car manufacturers alone to be left to die on the vine.

3) They don't have time to do it slowly? Tough! Them's the breaks. They appear to be doing things as fast as they can. It's not SiXMs fault the stock market is in a recession and that a lot of people are resistant to paying for radio.

Sad day when the WWE's stock is worth more than 15 times Sirius/XM stock!

You sound like management, or someone who works for XM?

The stock is tanking, and you MUST do things that hurt peoples feelings. Yes! Fire People, not poker chips. People, the same people who run channels that were going away, before the merger.

YES! XM and Sirius were doomed, and now they are DOO-DOOmed. Like Super DOOMED. They must make up for lost time (Thanks to the FCC, etc.) They can not go down the path of supporting 2 services, for years. THIS PLAN WILL NOT WORK.

All the people who loved Bear Sterns, etc, etc, etc... they loved working there, the customers loved them, but guess what - they don't work there anymore, do they? YOU MUST ACT QUICKLY, and hurt some feelings. Sorry, it's business, and this business is failing fast.

They offer 2 channel sets that MUST MERGE, sorry! TOO BAD! Be a pissed off customer, leave - but, where are you going to go though?? ANSWER THAT ONE!

Once you merge the channels - look around - You don't need HALF the people that work there! or the DC OFFICE.

DUH.

Now, on the website. Do you work at one of the "divisions"? Because it sounds like you are a manager, that needs to plan out the timeline and get your pie charts out. You are wrong. Once you merge the channels, the site would take a weekend to do. (Even if they didn't merge the channels) I do know, I have done it, on a MUCH larger scale.

..and outsource? really? Have you checked around to see how many web developers are jobless lately? PLENTY!

Now back to Subscribers... Merge the channels and bring on NEW SUBSCRIBERS, the ones that want ONE RADIO, ONE CHANNEL SET. How many new customers are out there are waiting? DO YOU KNOW? Build it, and they will come. THAT is what people want...

ONE RADIO - ONE SET OF CHANNELS. Like I said before, the pissed off customers don't have a choice. Sirius is the ONLY choice in SatRad! You can't get NFL on the iPhone, YET!!!!!

BUT, guess what! When someone makes an application to stream tv on the iPhone (Slingbox)
guess what - YOU DON'T HAVE CUSTOMERS! DUH.

I am thinking clearly. I am right, and you are thinking like AOL's old upper management. SLOW.

I don't need to read a website to figure out who likes what channels. I am sure there are fans, of certain channels, but guess what - tough.

...and please stop being fooled by the car manufactures BS. SatRad is NOT the most valuable thing - THE INTERNET, will be. Look at Chrysler, they are going to offer Internet in their cars! Get with it. The future is right around the corner, and it's no time to mess around. People won't wait to get their 10 country channels, when they can get the entire country collection via Apple's entire music collection on their iPhone.

They don't have time to do it slowly! Them's the breaks. They DO NOT appear to be doing things as fast as they can and SiXMs stock is in the toilet.

They owe WAY TO MUCH MONEY!!!

Start the cuts and move this slug, before the future applications pour salt in it's wounds!

Like, FlyTunes...

I don't work for XM, but I have seen mergers both from the outside and from the inside. You to me sound like a stockholder who's just pissed at the stock price being "in the toilet".

The stock could drop to pennies and they could file Chapter 11 and still be around.

You miss the point about pissing off the consumers. If you suddenly killed, say, XM, or Sirius, you'd piss off that subscriber base. So, let's say you had loads of cancellations after that. Since the subscriber base isn't growing, the shrinkage will hurt. If one grocery chain bought another, you wouldn't see them close half the stores, for instance, you aren't thinking logically.

Sorry, I've seen web design firms as well--sometimes you can't do such things in a weekend. I've seen things like CMS cobbled together in a version of the software three times removed from the current version and unsupported. Those things require planning. Enough bull about "doing it in a weekend". And it is likely they are outsourced because a lot of firms do that--they don't have in-staff web developers.

As far as the new technology--well, regular radio faces that too. At the end of the day, SatRad is just a regular form of radio that has more selection and a national footprint. They shouldn't worry about "what the competition is doing", and worry about Internet Radio--which is inherently unstable and riddled with problems like being sued for not paying royalties. Those disruptive technologies--you can plan for them but you can't suddenly change your entire mission statement because of that. WiFi's going to take years to get stable--or do you think that driving in a car will get a stable WiFi signal from city to the country.

At the end of the day, Radio is still Radio.

I'm being realistic because mergers happen like this everyday in business. XM and Sirius weren't star-ups which just have 5 people. Regular stock holders and consumers know this.

The only option sounds like boardroom Jimmy. Boob. Lay off all the XM people, shut down XM and lose most of the customers. I would do just as you say, leave. I have currently 7 subs. If Sirius/XM lost even 5 -10% of their sub base they'd be done. You can't just do that and expect to remain in business. Anyway, I still hope you lose your home for investing in and supporting the merger. Can you say penny stock? Buy high, sell low.

WWE = $15.16
Sirius = .90

'Nuff said!

I'm not getting it- how is Sirius better than XM? If I was a new subscriber and wanted to get Howard, MLB, NFL, NHL, NBA, O&A, FOX Sports and all the music channels on system I would have to go to XM yes??? How is Sirius better? Why keep Sirius around if I can get every thing I need (the best of both) on XM? Why have a choice at all. If they have the technology to put Sirius channels on XM October 6th, why not just merge all the content and send it out to both subscriptions? Is this a too simple fix? It sure would get things "merged" and get on the road to "the best radio on radio".

JRT and PFreak.

When the channel sets merge, you can leave. Please.

But where are you going to go? What are you going to listen to?

ONE RADIO - ONE CHANNEL SET - ONE CHOICE!

enough said. YOU DON'T GET IT.

You're taking this way too personally--T.O.O. Both PFreak and I are explain how real business works.

Exxon and Mobil merged--they didn't kill have their gas stations or rebrand either ones.

I don't know about PFreak, but I know realistically a merger is not about buying and then trimming away 50%. I don't know why you are suddenly for destroying one side of the equation--it's a merger, not a conquest.

For instance, XM seems to have more channel capacity than Sirius. What do you do then. Does XM give up its extra channels just because Sirius can't handle the extra stuff.

There needs to be consumer research to make sure the merge goes through without causing the subscriber base to leave.

Sirius XM Radio Inc (SIRI) $0.95 +0.03

World Wrestling Entertainment Inc (WWE) $15.29 +0.12

I have been a PROUD XM subscriber for more than 5 years and own stock in Sirius. MY opinion has always been that both companies spent way too much money on Megastars and not focusing on the core of the business (providing commercial free music and information/entertainment). I was totally against the merger but accepted the reality. XM/Sirius must focus on the core of the business and provide QUALITY programming. Most people I know acknowledge that XM has the best programming and I know that XM hardware is superior to what Sirius has to offer.
XM/Sirius needs to advertise to the target audience(people with disposable income - shrinking more every day I acknowledge)examples include magazines/other media like Time,Newsweek,USA Today,AARP,VH1 Classic,etc. Also dump the Megastars like Stern,Oprah,etc. Charge extra for premium sports like DirecTV does.

If the quality drops or advertising pops up on the non Clear Channel stations, I'll reluctantly cancel my subscription. I did read the interview with Karmazin concerning the value of the subscribers but don't trust that man one bit.

Will SIRI ever grow out of penny stock status?