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Why Is Sirius XM Radio Stock Going Down?

by: Brandon Matthews September 10, 2008 | about stocks: SIRI    

Brandon Matthews

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Let me answer this question, before you ask. A lot of people are under the impression that SiriusBuzz is some sort of Sirius XM (SIRI) stock pumping site. Nothing could be further from the truth. In fact, I recently suggested to all our readers that they should put stop losses in at 1.20-1.24 as the stock had broken yet another bottom. To those that listened, congratulations!

To those that did not and want to know what happened Tuesday, it can be summed up simply. Mel Karmazin, in my humble opinion, gave the worst speech of his life. Despite a lot of good news coming forth from the conference, Mel made a few statements that would have been better kept to himself.

When asked about financing of the 2009 converts, Mel initially was adamant that no dilution would occur. He offered up an exceptional plan that outlined the company’s ability to use cash on hand together with bank loans. Later, however, he went a little farther into detail, making the statement that he hopes he does not have to lend the company money out of his own pocket.

Excuse me? Mel just told Wall Street that he believes in Sirius XM so much, that even he does not want to lend the company money! How then can he expect a bank to do the same? A slip of the tongue? An accidental joke gone astray? Absolutely, but the effects were seen in the stock price depreciation Tuesday.

The other huge mistake was reporting low-ball estimates so low for 2009, that most analysts will have to lower their forecasts. Mel might as well have said not to bother to buy the stock until 2010, because he was so conservative with the subscriber estimates for the year, that he inadvertently lowered guidance.

Of course Sirius XM will sign more than 2 million subscribers next year, but Wall Street can only go on the data provided by the CEO of the company. Mel in effect stated that the company would see ZERO subscriber growth in 2009. In fact, his estimate for 2009 will be less than the expected total of 2008. All this on the heels of an exceptional presentation outlining increases in OEM penetration rates.

Another mistake? Of course. Any idiot could see that. The problem is there are not that many idiots on Wall Street. When Mark Wienkes and Jim Cramer get a hold of this, there will be hell to pay.

Disclosure: No Position

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This article has 125 comments:

  •  
    Sep 10 11:22 AM
    going to the Pink Sheets?
    Reply
  •  
    Sep 10 11:22 AM
    I'm in it for the LONG haul!!!
    Reply
  •  
    Sep 10 11:23 AM
    There you go again, still talking about Jim Cramer! lol Where is good old cos when you need him. Care to weigh in on how optimistic you are cos?
    Reply
  •  
    Sep 10 11:30 AM
    I have over 6000 shares. Should I just stick with it?
    Reply
  •  
    Sep 10 11:31 AM
    I think Cos killed himself today!

    LOL!
    Reply
  •  
    Sep 10 11:33 AM
    to be honest, i never liked mel....infact, mel has made mistake after mistake.. signing howard gave a one month bump, but afterwards mel didnt follow up with anything other than beathing his chest that he was a god! in the words of jerimiah wright...god-DAMN him! mel is an idiot, and should step down...but yea, i have no choice but stay in for the long haul now!! thanks buddy!
    Reply
  •  
    Sep 10 11:37 AM
    Ow goddamn falling knives HURT
    Reply
  •  
    Sep 10 11:37 AM
    Candy617, with price being this cheap you better off just hold for the upside. Obviously not much more to go on the downside, I hope and pray MEL can sell this company. How much are you IN?
    Reply
  •  
    Sep 10 11:38 AM
    Of course you should stick with it. You've ridden it down from 3 or whatever to 1, why dump it now? Ride it down to zero.

    The merger is a turkey. Anyone who cannot see this now ought to have their eyes examined. SIRI was in deep trouble when it started. Mel brilliantly sold a bill of goods to the big institutional shareholders of XM who also happened to have been total idiots. So, instead of $12 or $18, XM shareholders got, well, $5/share.

    XM management was just too stupid to realize they were being had. So, after the NFL failed to bail Sirius out, after Stern failed to bail Sirius out, XM unwittingly agreed to bail Sirius out.

    XM management screwed its own shareholders worse than in any transaction I can remember.
    Reply
  •  
    Sep 10 11:41 AM
    Hey Brandon, you say that you suggested to investors to place stop losses at 1.20 and 1.24. What good is that to the investor that has purchased stock all the way down from 6, 5, 4, 3 a share. Any investor would be afraid of loosing all of his money invested in this stock when analyst even hint of bankruptcy and it is in a tail spin. I don't think there is anything you or Tyler can do at this point to find favor with the diehard SIRI longs. Unless you can make the stock go up. You did not make us buy the stock but, unfortunately you kept a lot of us pumped up on the stock when we might have sold it a long time ago. I have not sold yet but most investors will cave soon and never look back. A lot of them have sold today. Very few have the balls to ride a stock down to dust or maybe its not balls but stupidity. Your right about what Mel had to say. If he does not have faith in SIRI then why should I.
    F u c k e d by DOJ, FCC, GS and now Mel. Who wants a shot next. I just stand in the street with my paints down hoping for a drive by.
    Reply
  •  
    Sep 10 11:50 AM
    I have 6200 shares and it's down $8000. at this point. Anyone have any idea when we should see something positive? Is this something that will take years?
    Reply
  •  
    Sep 10 11:51 AM
    Can't wait to buy at $.50
    Reply
  •  
    Sep 10 11:51 AM
    All of you who blindly followed the anonymous cheerleaders on these message boards deserve to lose your money. Anyone could see that this stock was going nowhere.
    Reply
  •  
    Sep 10 11:52 AM
    There is nothing positive to look for. The company's capital structure, which Mel approved, favors convertibles holders at the expense of the common. Your investment has been sold up the river by smooth talking media types. Time to sell and move on.
    Reply
  •  
    Sep 10 11:54 AM
    Well, Short term looks Bleak. Mel was way to conservative and his voice had a nervous tone to it. But I feel the good news is the product is great and when the confusion to the customer is cleared up then sales will rise. I know once this happens in the 1st quarter 09, everyone will jump on the bandwagon (including Cramer). If you really need the money then you have to sell. If you don't your'e downside risk is very little now. I can see this stock being worth $20.00 in a couple years. This product is just too good and most people are not sure what it's all about. Once it's made clearer thru great marketing sales will skyrocket. Once it's in your car you feel lost without it period.
    Reply
  •  
    Sep 10 11:54 AM
    Hey, relmor. Where are you.
    Reply
  •  
    Sep 10 11:54 AM
    Where is cos1000? He was so outpsoken,
    Reply
  •  
    Sep 10 11:57 AM
    cant wait ti buy at .10,,,,,,,,penny.... gas way cheaper when the song-bird flew
    Reply
  •  
    Sep 10 11:58 AM
    Candy617: I am in same boat, might as well ride it out, at least we will have nice tax writeoffs in the future. This stock is dead, it will go bankrupt. I am just hoping they get aquired.
    Reply
  •  
    Sep 10 11:59 AM
    It's a great product! So it must be a great investment, right? You all buy stock for the wrong reasons. You deserve to lose your money.
    Reply
  •  
    Sep 10 12:06 PM
    The stock is not going to go bankrupt. If it was it would have happened either before the merger or just after. So i think you nygiants58 should just go away and hide with the giants which are really from NJ and are really bad, stop screaming CHAPTER 11!!!!!!
    Reply
  •  
    Sep 10 12:15 PM
    Bashers on this site is probably shorts... put fear in longs to sell so they can profit.
    Reply
  •  
    Sep 10 12:22 PM
    I'm $200K down I own 80,000 shares I'm buying more and more, I will own 200,000 shares at this price and hold for 2 years and I'll be a rich man with all this money. Do the math 200,000 x $6 and that's being low i think it will be a $20 stock = $1200,000 or more if I sell @ $20 it's $4000,000 niceeeeeeeeeeeeee. Go Sirius LONG
    Reply
  •  
    Sep 10 12:24 PM
    I wish i had more money to dump into this right now
    Reply
  •  
    Sep 10 12:25 PM
    Hey Vicar--

    Don't be a dick and beat people when they're way down. You are unbelievably messed up.

    Reply
  •  
    Sep 10 12:26 PM
    Hey the plan......... is there a plan B?
    Reply
  •  
    Sep 10 12:27 PM
    If your still with sirius now we all have massive amounts of patience...Mel now knows that... Is this good or bad?
    Reply
  •  
    Sep 10 12:27 PM
    Vicar, I disagree. After 18months of fighting the FCC it took it's toll. Yes things have bottomed at this point. But they won the battle and control the national airwaves. They have not won the War yet, but they will. The confusion to the consumer and the companies themselves was overwhelming! Give them a break and some time and you'll see a dramatic turn around. Yes, on paper everyone's down huge, but it's gut check time and I'm in and will buy more shares.
    Reply
  •  
    Sep 10 12:28 PM
    That and i would also like to add... I WISH GS WENT BANKRUPT AND DO THIS COUNTRY A FAVOR!
    Reply
  •  
    Sep 10 12:30 PM
    We waited this far we can wait a little longer what's the worst that could happen.

    Two things:

    1. Lose all your investment.
    2. Be rich.

    Which one would you want?????? I want #2...but you can't get #2 if you cry like a little girl you have to be strong and hold that's the only way you strike BIG!!!!!!!!!!!!!!!!!!!...

    Good Luck
    Reply
  •  
    Sep 10 12:44 PM
    where do you think these massive amounts of shares being traded are going... i have a guess.
    Reply
  •  
    Sep 10 12:45 PM
    Don't get mad at me. I tried to warn all of you, and you chided me relentlessly. You all lost money as a result. But it's going to come back, right? Run Blue Dog! It's a great product! Mel is a great CEO! What happened to all that blind cheerleading? The company's capital structure has taken all the air out of the common. You should have listened to The Vicar!
    Reply
  •  
    Sep 10 12:46 PM
    The Vicar is NOT buying, even at these levels.
    Reply
  •  
    Sep 10 12:46 PM
    Vicar still has sirius shares
    Reply
  •  
    Sep 10 12:46 PM
    hes just mad... sitting in his moms basement... trying to take it out on us.
    Reply
  •  
    Sep 10 12:47 PM
    either that or he has $40,000,000 and is going golfing in 15 at an exclusive private resort and we all should have listend
    Reply
  •  
    Sep 10 12:52 PM
    Penny its a good thing that we sold this at 1.14.....I m siris thinking at looking this over when it hits .25
    Reply
  •  
    Sep 10 12:55 PM
    Now SIRIUS-XM can be classified as a penny stock. Perhaps it may be delisted. Perhaps it may be forced into bankruptcy. Perhaps we who hold the stock may be expieriencing another KMART sitiuation where the stock holders will be holding a worthless stock. My sympathy lies with all who are bitter and for good reason. I have held on for four years and have but 1,000 shares and also bitterly disappointed. I will not give up the ship yet and will hold on to hope that Mel will change things around. If not, then it will be just another tax writeoff. I will keep the faith while there is still hope.
    Reply
  •  
    Sep 10 12:56 PM
    ipenny its at .9515 noe wanna bet its going down????
    Reply
  •  
    Sep 10 12:58 PM
    Vicar is a holder of Senior Notes and he is wishing upon a star. Relax people. i personally know a few of these people and they all think alike. They dont want to just get their 9.75% interest, they also want the company to folly. Why? Because they will own the company. Why would they want to own a company thats worthless? Because its not and they know it. They would be in alot better position if Common Shareholders were wiped from the board and their position would be improved drastically. Unfortunately they may never see this and they wishful think. They couldnt bear to not be on a ride from .99 to 3-4 dollars. The worse thing that could happen to these guys is success. That to me is pitiful. Good luck to Vicar and All Shareholders. May the best man win. And Vicar, please come out from under your rock to take your licks if Shareholders dont lose here. It would be only fair to be fighting a fair fight.
    Reply
  •  
    Sep 10 01:01 PM
    Or maybe Mel knew what you write and it wasn't Freudian slip at all.
    Reply
  •  
    Sep 10 01:04 PM
    Vicar,

    what kind of a name is that?

    V 4 Victory
    I 4 Income
    C 4 Crazy
    A 4 Award
    R 4 Rich.

    Be nice to people the world will be nice to you.

    Reply
  •  
    Sep 10 01:05 PM
    Connorport is cos1000 in a new permutation.
    Reply
  •  
    Sep 10 01:13 PM
    Absolutely not! Just enjoy everyones opinion even yours. I get it! I understand your stake in Senior Notes but you can be a shareholder as well in the event this company takes off. What do you think?
    Reply
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