Loading...
Symbols:
Authors:

Sirius XM On the Rise - Does Microsoft Want a Piece?

by: Jeremy Richards September 26, 2008 | about stocks: MSFT / SIRI    

Jeremy Richards

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Is Microsoft (MSFT) ready to take a stake in SiriusXM (SIRI)? Some think so.

Former European equities analyst and now research consultant Ben McClure noted:

It's hard to imagine Sirius XM's creditors pulling the plug on the company without too much reluctance. Lenders recognize that the company, while cash-strapped, is not failing. They know that if its looming debt obligations are resolved, Sirius XM will be a self-sustaining business.

The company is increasing revenue while quickly decreasing costs. Pro-forma revenue should come in at roughly $2.4 billion this year and $2.7 billion next year. With synergies from the merger of Sirius and XM tallying up to more than $425 million per year, Sirius XM management projects a move from a $350 million loss this year to a $300 million gain in 2009.

Sirius XM could also do a deal with an industry partner looking to take advantage of its large and growing subscriber base. The newly merged Sirius XM is expected to close out the year with 19.5 million satellite radio subscribers. Its target for next year is 21.5 million. To put that number into perspective, the company's subscriber numbers are not far behind those of cable giant Comcast (CMCSA), which has 24.6 million subscribers. Potential partners that come to mind are Apple (AAPL), Microsoft (MSFT) and satellite TV operators such as DirecTV (DTV) and Dish Network (DISH).

Disclosure: Long SIRI and buying more under $1 well worth the risk with excellent rewards. No other positions.

Related Articles

This article has 129 comments:

  •  
    Sep 26 06:44 AM
    Other than the headline and first line, where is the MSFT link to Sirius?
    Reply
  •  
    Sep 26 07:19 AM
    give me a break, we go from Trump to apple to microsoft. where is the proof!! nothing but dreams
    Reply
  •  
    Sep 26 07:52 AM
    I have to say, your article sounded like pump with no merit.
    Reply
  •  
    Sep 26 08:20 AM
    buying more under $1 well worth the risk with excellent rewards. No other positions.
    kidding?
    Reply
  •  
    Sep 26 09:06 AM
    "Lenders recognize that the company, while cash-strapped, is not failing."

    Hard to imagine how never turning a profit, never producing positive cash flow, negative working capital, large debts coming due and being substantially under capitalized can be defined as anything except failing.
    Reply
  •  
    Sep 26 09:13 AM
    If Mel does not come out with something for shareholders to sink their teeth into we are done. What happened to after Labor Day Info. No guidance but some ill advised comments at the conference. I have never seen a stock that does not represent the underlying company such as SIRI. The product is amazing and the service I could not imagine living without, so......why does the stock perform as if the debt is the only issue holding it back. Where is relmor when you need him. I have been researching this stock manipulation idea and does have some very strong merit. Super Mel needs to put his cape on, explain where the cash is coming from. The stock can not break out past 1 because of phantom trades. I have been a long time share holder and I am down around 60% with cost averaging going on. The share holders payed for the merger and we have been beaten down, we deserve more info. I have three subscriptions and have been waiting to see if new receivers like the stilletto 2 are coming out. Considering the merger took 17months.....where is the marketing, products, guidance. The day the deal with GS got done, contingency plans should have been set in motion. I give SIRI an F on post merger contingency plans. I have read all the articles and posts about this and there are tons of good ideas. I still chuckle to myself about big Papi....ebrey game..ebrey team....thats funny. Is there not one NFL player that can come out and say something sillly? How about Big Ben! Good luck Mel, this retail season might be the worst in 15years.
    Long SIRI, Long Steelers
    Reply
  •  
    Sep 26 09:23 AM
    Don't forget SiriusXM (SIRI) continues to attract new content every day, Terestrial Radio continues to loose content and advertising daily. Subscribers continue to rise, new electric and hybrid carscomming to the market and $25 billion to the auto makers to retool! Current price is cheap and internal cash or a rights offering could take out short and long term debt. Turning to a profit in 2009 would bring tremendous institutional support to SIRI. Don't invest your last dollar, but put you spec dollars to work and look back at a significant profit in the years to come. risk/reward ratio is in favor of reward.Any of the above companies would love to have access to this subscritiion pipeline. Satelite ecomerce is on the horizon and new radios could alow customersto purchase products directly. Look how long it took Comcast or Direct TV to grow subscibers! In the beginning those who believed in thier base of premium content for paid subscritions won out. Buy on any weakness and take a long term outlook on future growth.
    Reply
  •  
    Sep 26 09:23 AM
    SIRI is down almost 9cents premarket sweet! Anyone have info? please post
    Reply
  •  
    Sep 26 09:32 AM
    You know, I am convinced that nobody knows what the hell they are talking about regarding this company. There is something brewing behind the scenes that is causing these crazy price fluctuations and there is somebody that knows exactly what it is. The problem is that we (the general shareholders) simply do not . So we are forced to submit to play this obnoxious game of cat and mouse that, quite frankly, just is not very exciting any more. Sure gambling can be fun, but the stock market was never meant to be a casino. This used to be a place where you could make comfortable investments based on a companies financial foundation and be able to expect a return based on growth and prosperity. Now it seems more like throwing your money down on a roulette wheel relying more on luck than anything else. I still will not give up on this one. I had the chance to cash in when I was ahead and rather chose to ride it out. Now, unless I don't mind losing $150,000+, I will continue to hold. I am still confident that Sirius will turn out to pull itself through this one once everyone is through playing with it. Understand that it is not just the handling of Sirius that I am disgusted with, but with the market as a whole. It has been an arena of extreme abuse in the past decade and desperately needs to be regulated more stringently.
    Reply
  •  
    Sep 26 09:40 AM
    I know one thing for sure and everyone will agree: This Sirius stock is an absolute bargain right now and this will be on the rise today after this story. One would have to agree that 1.60 is looking very possible by the end of the year.
    Reply
  •  
    Sep 26 09:45 AM
    Many investors think "OK, we'll just absorb a bunch of losses, cover them with more borrowings, but we'll keep growing and eventually we'll make money and the stock will achieve its PPS destiny.

    IT TAKES CHECKING ACCOUNT CASH TO STAY ALIVE!

    Such a situation places a company's fate totally in the hands of willing lenders. (New equity at current price is out of the (dilutive!) question.)
    As I see it SIRI is in a life-or-death race to achieve sufficient cash flow to make a good case to lenders and there is a less than 50-50 chance that lenders in current and 2009 credit markets will want to keep the enterprise afloat. The current financial statement metrics are HORRIBLE. A Ch.11 reorganization would do wonders--the subscribers would be taken care of but the shareholders would NOT.
    Reply
  •  
    Sep 26 10:08 AM
    Is there any way that the service could be connected to an airplane? I know that I would much rather listen to a live football game rather than wait until I hit the ground to see the score. Think of the market that has not been touched - there has to be a way......or am I just dreaming?
    Reply
  •  
    Sep 26 10:12 AM
    BURTBECK
    You are not taking into account that logic does not factor into the equation. If it did, Wall Street would not be such a mess!
    Reply
  •  
    Sep 26 10:12 AM
    United airlines has XM as part of their in flight entertainment.
    Reply
  •  
    Sep 26 10:19 AM
    Burtbeck,
    You must still have that short position eh? What you lookin' to cover at?
    Reply
  •  
    Sep 26 10:30 AM
    Doesn't this guy know Satellite TV is already partnered with SIRIUS XM?
    Reply
  •  
    Sep 26 10:50 AM
    Given the climate of Wall Street and Washington, DC on banking and brokerage credit leveraging abuse, it is easy to be pessimistic on any speculative stock and to be convincing. Credit markets have seized up, WAMU, just went under, and the bail out plan has been thrown into the Presidential election. These are not normal times for Wall Street or Main Street. Sometimes we SIRI investors are myopic in our view of the world and fail to look at the bigger picture.

    All things are not Sirius XM Radio right now. On the bright side, although the Detroit bailout will not make money available at 4% to Sirius directly as a supplier, it will make that money available to the auto manufacturers for retooling of energy friendly autos. That makes existing auto capital available for other business lines, maybe a credit line to Sirius, maybe. Sirius will have a bad 3rd quarter and needs to solve the Feb 09 debt problem and will with help from its partners. Sirius pays its bills and is a growing revenue and free cash flow story. This is a tough partner to find in these days of financial woe. Bankruptcy at this time is out of the question because it fractures trust in the business model with Sirius' Partners and gives no reason for them to further invest in a failed model. They will not do this, not because of their loyalty to the common shareholders but because of the partnerships with Appollo, Honda, Ford, GM and Chrysler.

    This is not a time or, should I say, this is the worst possible time for Mel to be out there talking about new products and programs. No one is listening. How many people heard about the $25Billion Auto Bailout, sorry Loan, at 4% yesterday? We need to get through the Politics of Washington and Wall Street before anyone will refocus on the Big Blue Dog. In a time perceived and real financial crisis it is not the time to waste advertising dollars on Sirius' new products and programs.
    Reply
  •  
    Sep 26 10:51 AM
    The best of times, the worst of times...

    Give SIRI some credit. Sentiment on the company has gone positive in he face of a mountain of negativity...they're fighting the good fight and have a lot of work to do. Anyone who expected all their problems to be solved by now is not right in la cabeza. I do hear people's frustration...a lot of money is underwater right now, including mine. The stock is definitely in a shall we say "contrived state" at the moment--or maybe just to say "being controlled outright" is better. But that's Wall Street. Is it frustrating?... hell yeah.

    So yesterday out comes the 8K announcing the switch to KPMG. Either way, that's positive progress. It's most likely their way of starting fresh with the newly combined company...'check' on the "to-do" list...of which there is plenty. The Oct. 6 new release is around the corner--more progress. Obviously, with the deterioration of the credit market (not SIRI's fault), they're not going to sign any deals right this minute. You wouldn't want them to at 14%...nor do they want to. They'll wait until this crisis passes and the rates get better. They have a little time yet, no sense on rushing into a bad deal. I think overall too many people are expecting miracles and not allowing the company its due diligence to get everything that needs to be done, done.

    Btw...Premarket and Afterhours = unreliable volitility (unless based on pertinent, actual released company news). Also, yesterday showed how much the Street is awaiting the refi news. The belief that deal "is going to happen" is the only thing preventing this stock from being .25 (similar to WS this week--if there were no promise of a bailout, the market would be tanking big time). There was anticipation of some refi news coming from the Deutsche Bank conference (though unrealistic because interest rates are way too high). So no news equals more fear and the stock was down in AA .04--classic stuff of rumor and conjecture. The bail-out f'up last night certainly doesn't help matters. I say give SIRI the next two months to get more done. By then, the near-term to-do list should be near all checked off--and showing better results for shareholders.
    Reply
  •  
    Sep 26 10:56 AM
    Oh by the way.... the article above offers very little and represents more speculation of what might be. Microsoft? Apple? Google? Who Knows??
    Reply
  •  
    Sep 26 11:02 AM
    Cos1000...

    Good points you raise and exactly my point today. It's about the big picture not the trenches of today. And I also agree about this article. Old hat...
    Reply
  •  
    Sep 26 11:15 AM
    Good thoughts SL62. I read the 8K yesterday as soon as it was posted. Your comment on the form makes clear that Mel's switch to a new accountant was made with a positive purpose in mind.
    Reply
  •  
    Sep 26 11:16 AM
    s162, and I agree with your assessment of SP movement. It drifted around yesterday and the day before on low volume showing a lack of commitment to take it down. I was able to snatch 4000 shares this morning at .79 and .80 with the 3000 I sold at 1.06 last week. Now I will wait as time and business plan execution unfolds with a keen ear on the 2/09 debt Refi.
    Reply
  •  
    Sep 26 11:39 AM
    cos1000---

    You say "SIRI investors...are myopic...and fail to look at the bigger picture..."

    I'm pretty sure that's what I've looked at every day since $9.43 pps nearly four years ago. My view has led me to a gigantic profit on my (now nearly covered) short position.

    You, my friend, are commiting the cardinal sin: YOU ARE ARGUING WITH THE TAPE.
    Reply
  •  
    Sep 26 11:54 AM
    Firing the auditors? Uh Oh! It may be perfectly innocent and normal course of business, but once again BAD TIMING! It's just like when a company loses it's CFO in bad times. Nobody ever believes the usual "to spend more time with my family" reason. Mel's committing hara kiri again.
    Reply
  •  
    Sep 26 11:56 AM
    If you think $0.79 per share is bad, it'll get worse, bargain or not. Ordinary market fluctuations aside, the economy is going to tank bigtime on this bailout problem in the next year and there will be a flight to quality, if anywhere, in the market. SIRI isn't quality. I love the product and hope I am wrong.

    Sorry Jeremy, I agree. As far as the MSFT speculation goes, I agree with everyone above. It seems like a shameless pump. Even if it happens, it will likely come at the expense of current shareholders again.
    Reply
  •  
    Sep 26 11:57 AM
    If MSFT, AAPL, GOOG or whomever come in with capital, exisiting shareholders are done. SIRI has zero leverage in a negotiation and WILL give away most all of its upside in a capital infusion.

    SIRI eventually making it is not tantamount to victory for current shareholders. The stock could go to $10 eventually, but existing shares will be worth on the order of 1/20 after the imminent dilution.
    Reply
  •  
    Sep 26 12:01 PM
    Burtbeck, congratulations on your windfall. Its so easy to take a comment out of context to prove your view. My comment was directed at looking at Sirius vs looking at the market conditions in general.

    I am not arguing with the Tape, I am a Long investor who has improved his position in this company over time in the manner I described above. I refuse to have a Margin account because I do not want my shares lent to folks who are betting against my Long position and because I don't buy Stock on Credit. Again congratulation on your profits and time will tell on how my investment in this company plays out.
    Reply
  •  
    Sep 26 12:51 PM
    jswede, you are so full of blank, your eyes are brown. Where do you get this? You are just a fat bald man without a job, sitting behind a computer, knowing absolutely zero about this stock. Sirius will soar. All the signs are there.


    On Sep 26 11:57 AM jswede wrote:

    > If MSFT, AAPL, GOOG or whomever come in with capital, exisiting shareholders
    > are done. SIRI has zero leverage in a negotiation and WILL give away
    > most all of its upside in a capital infusion.
    >
    > SIRI eventually making it is not tantamount to victory for current
    > shareholders. The stock could go to $10 eventually, but existing
    > shares will be worth on the order of 1/20 after the imminent dilution.
    Reply
  •  
    Sep 26 12:59 PM
    Real deal, for all you know about this stock why don't you tell us what your bought price is? If it's higher than $1.20 or so, why didn't you, with all your knowledge of this stock, sell earlier so you could buy in at .77?
    Reply
  •  
    Sep 26 01:00 PM
    cos1000...you just showed tremendous restraint regarding Burtbeck. Very impressive.

    Burtbeck...I will ask you. Since you have made such a killing shorting out SIRI...why bother participating in this forum? Is it just to rub it in the face of most here who actually believe in the company and want to make their money in concert with the company's SUCCESS, NOT THEIR FAILURE? You obviously are banking on their failure. Being the corporate raider type you appear to be, I have to say, your need to be blogging puzzle's me...any insight?
    Reply
  •  
    Sep 26 01:02 PM
    sl62, sorry to disagree with you, but people who are successful in their investments make money going up and down. If you want a religion, stocks are not it.
    Reply
  •  
    Sep 26 01:12 PM
    I hope everyone is trying to sell and rebuy lower. Giving you an excellent chance this last drop. I improved my buy in this week from 2.37 to 2.11, and counting. If I can get it to 2, i will feel even a low ball buyout price at $2 would cover me. Good luck, and lets see what happens end of day. It took selling 30 percent blocks at a time, but its a gamble you have to take, if you want out of this quicksand and get some footing at reasonable levels.
    Dumb article, and I didnt even read it. Dont care. Dont read dumb articles. Pure bs, and I hate nothng more than BS, as Im NOT Jim Cramer knows.
    Reply
  •  
    Sep 26 01:16 PM
    I love all the bashers that come out of the woodwork when ever the stock has a bad day...

    I'm not sure of the reason a decision was made to move to KPMG, but as a former KPMG employee who also worked a few years in Internal Audit, I know that a lot of times this decision is based more on who comes in with the lowest contract than it is on performance. The Big 4 firms are all essentially the same, a bunch of fresh faces right out of college doing slave grunt work testing controls for hard drinking partners. Whoever puts up the lowest price gets the contract. Unfortunately due to SOx, they now are a must have and own the external audit market.
    Reply
  •  
    Sep 26 01:16 PM
    This stock does not need to be bailout, companies with negative cash flow need to be bailed out. Sirius is (possible at this second) cash flow positive. We dont know, since the last quarter to report was backlogged significantly. Q3 might show a loss, but thats to be expected, worst quarter of the year. If your guidance is close to cash flow positive(within 2 quarters) and your making loan payments no problem, your fine. This debt due is not leveraged debt, its straight debt requiring money to pay off they can generate in less than 3 years at current income levels(ok not current current, but low ball guidance current). Im sick of the trolls on here trying to get the weak hands to sell. How much does GS pay you, and lets see how much you sold you soul for. Just fess, we wont be mad. Or you sold and lost a ton, and you like misery with your company. So post facts, or go away, your not needed, wanted, and soon to be ignored(except by me, I will not let one lie go unchallenged). Show me facts, or I'll show you the door.
    Reply
  •  
    Sep 26 01:20 PM
    sl62--I have participated here and on Yahoo pretty rarely---recently maybe more than my average.
    Every one of my postings has been intended to give hard reasons why SIRI has been overpriced every day-- I am trying to save the 'Strong Buys' from foolishly wasting their money, as they have indeed done long term (I hope maybe some profits on short term trades).
    And my posting today @ $0.78 pps is intended to save exactly that amount---as I said, I feel better than 50-50 chance $0.00 is on the horizon.
    Reply
  •  
    Sep 26 01:20 PM
    s162, Shorts, Burtbeck, are a necessary part of the market and legal shorting is relevant to marking to market the price of an equity and keeping "irrational exuberance" out of the SP. Its those "Naked Shorts" that I want to see go down. My not having a margin account and not having the "nature" to invest in failure may keep me a little less wealthy in cash but ,feeling good in spirit. Do not confuse my feeling good as a religion but simply a state of being.
    Reply
  •  
    Sep 26 01:20 PM
    not jim..

    Religion? That's a pretty wild accusation and an obvious mis-interpretation of my comment. And, I didn't realize you were Burtbeck's spokesperson....
    Reply
  •  
    Sep 26 01:25 PM
    Q4 will show positive cash flow, IMO. I think that is the quarter that shows what Sirius is made of, and its future potential. On the day Sirius clears $2 I want Im Not Jim Cramer on here that day, and your buddies JSWEDE and Vit whatever dude. I want you all here to kiss my feet. Each toe. Of course, only in spirit. I want you to post at that point that you have no clue what you are talking about, never did, and was nothing than an ignorant troll with no life.
    Definition of no life...
    Websters.."I dont own any stock on this blog, Im not interested in buying it, but I post here daily." LOSER LOL LOL LOL Do you have a job? Or did you lose that on margin too.....
    Reply
  •  
    Sep 26 01:32 PM
    sl62 maybe us short fat bald guys stick together. lol
    Reply
  •  
    Sep 26 01:39 PM
    Sirius needs to annouce something/anything to boost growth expectations... Its time to stick a satellite receiver chip into cell phones, we have GPS chips in cell phones alreadly. How about Sirius-Motorola???
    Reply
  •