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Sirius XM Holdings Inc. Message Board

  • buyitsellit2003 buyitsellit2003 Jul 21, 2004 12:38 PM Flag

    This isn't good..

    This is as ugly of a report as it gets. If we do show growth, there is only upside. We may be at a bottom. However, if the revenue doesn't increase and the spending doesn't show sub growth, SIRI is in big trouble.

    Hopefully this holiday season brings cyclical hype to SIRI and we see more buying, but this recent report is nasty by every measure. Regardless of what the blind bulls try to extract from it. Regardless of the manipulation posts... fundamentally, SIRI is in trouble. Every single measure is expanding in the wrong direction. Spending per sub, way up. Revenue, the gross is up slightly, but net is way down. Per share estimates are worthless because of the dilution and we still missed the numbers. Subs, way off our goal of 1 mil by year end 03. Now revised numbers are shooting for 1 mil by year end 04. If things go as they are, we are never going to hit the revised Q4 sub expectations. Meanwhile, SR is growing and XM is dominating. There share price is not much better... I just fear that if the numbers do begin to show, the fact that the company is already valued at 3.5 bil is enough to scare those that care about PE multiples.
    Bottom line- trouble in paradise with 640mil left.

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    • It certainly isn't ugly, IMO, and to say that Siri is in "trouble" is simply hysterical. Revenues ARE on the increase, right in line with where we are in the life cycle of this company (early distribution phase). It is to be expected that net revenues still bear the weight of mfg and distribution without offsetting sales. The sales come next. Huge revenues will clearly be realized starting almost immediately from sources like Radio Shack and other retailers, plus the positive effects of the NFL (HUGE!) haven't even begun to be felt yet. Break-even in '05 will likely precede XM's, and that is most encouraging.

      Your "Chicken Little" imitation is either very naive or alarmingly deceptive. In either event, you obviously have an agenda here different from any responsible siri investor.
      Bottom line: this stock is now most solidly positioned for a phenomenal success in the months to come. If you don't buy that concept, buy another stock. Easy as that.

      • 1 Reply to bdgr100
      • By design, Sirius Satellite Radio (Nasdaq: SIRI) is a money burner -- just like bigger competitor XM Satellite Radio (Nasdaq: XMSR). The problem for Sirius is that it's burning cash quicker than anyone imagined.

        This quarter's earnings release revealed revenues that came in a tick below analysts' estimates and a loss that also exceeded the Street's expectations. The $13.2 million on the top line looks a lot better than the $2.1 million in the prior-year quarter. But remember that this company carries a market cap of $3.23 billion.

        Sirius's second-quarter per share loss of $0.11 looks slimmer than last year's second-quarter loss of $0.12, but keep in mind that there are 33% more shares outstanding now thanks to heavy stock issues needed to raise cash to keep the signal coming. The real loss was 23% wider: $137 million vs. $111 million.

        As usual, management and Sirius die-hards are going to crow about distribution deals with Ford (NYSE: F), DaimlerChrysler (NYSE: DCX), Best Buy (NYSE: BBY), Circuit City (NYSE: CC), and Wal-Mart (NYSE: WMT). They're also going to point to record subscriber additions this quarter. The firm added 129,000 to the rolls. Looks nice, but that's chicken feed next to the 418,000 XM had put on during the same period. Consider that Sirius's total subscriber base is only half a million.

        And Sirius is not only losing more money as it grows, but it's also paying more for the privilege. The firm spent $76 million -- almost six times subscriber revenues -- on marketing and subscriber acquisitions. Divide the $76 million by the new subscribers, and the firm laid out an incredible $590 per newcomer, 40% more than last year. Those pairs of ears need to stay on board for almost five years before Sirius can break even on the cost of attraction alone.

        There will be screaming today about quality and content. Maxim radio. Eminem. Tony Hawk? Blah, blah, blah. Quality -- if that's what this is -- doesn't always win.

        Here's what should matter to you as a shareholder: Not counting depreciation or stock-based compensation, operating expenses and interest cost Sirius around $170 million so far this year, and the price tag has been growing. Sirius has $640 million in cash. How long before the firm needs to pull more stock off the dispenser? When will the firm ever break even? What are you willing to pay for the wait? You do the math.

        For more Fool coverage of satellite radio:

    • Don't ever under-estimate the power of the American consumer to embrace and catapult what is nothing less than a "beloved consumer electronics product"! Sirius growth coming to a neighborhood near you!
      500,000 is an excellent stepping stone to 1 Million, end-of-'04, and that's only some months away...at 1 Million, the next million will come quicker than the 500...to 1 Million came. Sirius growth is_ON!

      • 1 Reply to american_chariot
      • Ive got to beleive the cash cow known as the NFL is going to help. Many of the new announcments are seeds that need time to grow. I agree that the numbers dont look good, but if they were that bad, this stock would be in the red easily by now. But its holding its head above water right now and i have to believe thats encouraging.

        They had Steve Cohen (director of the NFL for Sirius) and another guy from XM on Cold Pizza this morning on ESPN2. Not 1 question was asked to the XM guy about the NFL, which to me is a very good thing for Sirius because thats really all they asked Steve about. Now if the numbers still look horrible after 2 more earning reports then it may be time to go. If the NFL cant help...nothing will!

 
SIRI
3.46+0.08(+2.37%)Feb 12 4:00 PMEST