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Sirius XM Holdings Inc. Message Board

  • dukeufinstu dukeufinstu Jul 29, 2012 8:24 AM Flag

    Duke: Two Sides To Every Story--Part 2

    There is a story with SIRI that has two sides to it....July auto sales. The last time we checked in with Spencer he was telling us that Liberty needed to control 54% of the common to replace SIRI's board. That bit of wisdom wasn't quite true but let's not sweat the little stuff. Oh, and let's not leave out Rotten Apple and his fairy tail entitled July Auto Sales and SIRI XM.
    Here is how Spencer starts off his opus. "The bad news is that July auto sales on an absolute basis seem to be softening a bit...Sirius XM investors need not worry as a soft July is typically expected and the volume is not that far off what is expected". He goes on to say that retail sales will be 1M vs 1.033M in June. He also says the actual level of sales will decline by 115,000 units according to Edmunds but the good news is SAARS will come in at 14M vs 14.1M in June. Fantastic if you don't understand what is really being said.
    Here is the other side of the same story. According to Edmunds retail sales will be down 115,000. Total sales in June 1.28M, July 1.165M. Retail sales will fall 3.4% and overall sales down 9.4%. So why is SAARS down only .1?
    SARRS stands for Seasonally Adjusted Annualized Rate. The idea is that the government will adjust the ACTUAL SALES by some predetermined rate so that it looks sales take place at an even pace all year round. What is the adjustment for July? The government is going to add 70,000 mythical sales to the actual rate and you will get a SAAR of 14M. The problem for SIRI is that it can't install any radios in these mythical sales. So if you really want to know what is going to happen to subs you ignore SAARS and look at the raw unadjusted numbers which calls for a month over month decline of 115,000. When the Duke tells you sales are declining month over month I am looking at the raw sales and not SAARS which is a fairy tail. If you looked at the real sales for the first 6 months SAARS under reported the raw number of 7.3M. That is why SIRI reported 622K subs. The rest of the year will see real sales at 6.7M so look at second half subs to be lower than the first half. Total subs should come in at 1.7M for the year.
    Spencer wasn't finished. He said, "In 2012 fleet sales have been an upside surprise again and again. I think Edmunds is being too conservative by using the traditional 15%. While I am hesitant to go all the way to 20%, I think that is where fleet numbers will come in."
    So Spencer is smarter than Edmunds. I guess if you don't like the estimates you just change them. Okay let's say Spencer is right. It still doesn't make any difference. Why? Fleet sales is another word for rental car and government sales. Every rental car already has sat radio in it. So when a new one is bought it just replaces on that is retired. The only growth in subs is if the rental car industry was growing but it isn't.
    As I offset the old rental cars go to the used car market and some undisclosed percentage become new subs.
    Is there another problem with SAARS? It doesn't measure switch outs. Some of those new cars are being bought by people who already have sat radio. They cancel the old sub and take the promo sub before resigning. Another net zero transaction. There are also buyers who rejected sat radio and won't change their mind with a new car. You now understand why forecasting subs is an like a stab in the dark. Everyone has a model and it is imprecise at best. The key is that monthly SAARS means nothing.
    Edmunds also said that inventory would rise from 52 to 58 days at he end of July...a 10% increase and an ominous sign of the slowdown. That stat didn't make it into Spencer's article. Two sides to every story. Pick the one you like.
    I'm sticking with my 2.26 prediction. It is funny the longs keep telling you I'm an idiot. What other short predicts the stock will go up?

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    • It is funny the longs keep telling you I'm an idiot.

      Duke,You have missed out on at least 3 huge runs over the last 2 years.

      Can you predict a huge run or is that not really your expertise?

    • Your Prediction seems to be unfolding .......Auto Sales are slowing.... dramatically.....

    • Hey Duke, I'm just wondering, what ever happened to this prediction you made in February 2010. Did the Duke fail us when making his prediction. As a duke follower, I believe that myself along with the other duke followers deserve an explanation!
      "Okay, so when did SIRI hit its high for this millenium and what was the price? The high was $9.43 and it was hit on 12/7/04. When did it hit bottom...2/11/09 at a nickle. The downturn lasted four and a quarter years which is in the standard deviation of the Decade W Pattern. Now if you are a long term reader of The Duke I told you the downturn actually ended on Oct 14, 2009 when the stock crossed 57 but for a purely amateur look, go with 2/11/09. The Decade W Pattern tells us that SIRI has begun a five year upturn that will peak in the fourth quarter of 2013 or the first quarter of 2014 give or take.
      By that point JM will have achieved his goal of world domination, Mel will be at the end of his current contract and heading into a well financed retirement with the glory of having saved SIRI from BK. JM will no longer need SIRI to prop up LCAPA, the sweetheart deals will end and SIRI will begin a long and painful descent to $2.50. JM will acquire a debt free company in 2016 for $3.00 a share.
      I also believe that many of you will hold on long beyond the time you should and lose most of your profits.
      The first week of Jan. I told you about a 38 page report that had been written about Liberty. I told you that it was written by some hot shot young analyst and how it was dismissed by the old pros on the Street until GM almost quoted from it verbatim when asked about SIRI. I even joked that I was sure that the author had better things to do on a Sunday morning than read The Duke so I wasn't worried about being sued for revealing the contents. I know it is Sunday morning folks, but try and wake up, The Duke wrote that report.
      I told you my clients bought millions of shares between 53 and 61. They added to their positions above a buck which I said would occur by 2/15. Sorry for being off a little.
      You have just read the gist of the 38 page report. The only thing left is to give you my peak price...$9.75-10.25 before the selloff. Can't wait to see what you do with this one".

    • Something isn’t completely adding up in the numbers Duke. Back in Feb, when MK gave us his underpromised number of 1.2M, I said the real number was 1.7M. We’ll see what churn is but this latest number seems to be driving the same result as Q1. Tells me they’re pushing retention at all cost and penetrating the used car market better than expected. The former seems to be why ARPU slightly missed my 11.80 low-end target, while Spencer was completely off on that metric as well (no surprise). I only use actuals myself but even if I use your 6.7M estimate for 2H actuals, straight-line math puts subs at 1.9M. So what else are you expecting to get to 1.7M? I haven’t wavered from 1.7M yet either, but will bump it up to 1.9M if I see a churn stat that confirms my expectation of what’s going on.

      Same old story in Europe. Playing with monopoly money until the hand is called. I’m still playing sell in Aug, wait for Sept. Similar to the sell in May, wait for FB IPO play. Crossing my fingers the market wakes up at some point and gives Bad Ben a reason to act in Sept. Because he sure as heck ain’t doing a thing into this tape. The Bonds actions on this 2-day rally moreso told him he doesn’t need to act yet. Save the bullets.

      2.26 sounds nice for my ongoing 1.82 trade. But this is still a moving target for me, with a deadline.

    • It will go up. Tecnicals are positive and sales are up. Now where Sirius will land? Somewhere between $2.26 and $2.80 and you take your pick.


      People with knowledge of Liberty Media say Malone and Maffei believe they're investing in a vastly undervalued asset. Malone, a billionaire media maven, for years has been enamored with satellite, which he considers a cheaper alternative to cable TV and phone service. . That could give Malone, who joins the Sirius board along with Maffei, the time he needs to make Sirius a working part of larger satellite ambitions.

      Malone, a Yale-educated engineering PhD, hasn't said what those ambitions are, but he has a reputation for thinking several steps ahead of his peers. "If there is something to make out of all of this, John Malone probably has it figured out already," For starters, Malone's Liberty Entertainment unit owns a 48% stake in DirecTV (DTV), the nation's largest satellite TV operator, with 17.6 million subscribers. DirectTV already offers music from the Sirius XM service, but it could market the products to customers for use in their cars at a fraction of the current $12.95 monthly subscription fee for Sirius XM. Liberty could also harness unused satellite spectrum controlled by Sirius XM to offer more channels of video.

      An equally intriguing prospect is how Sirius might fit with Liberty's 37% stake in WildBlue Communications, which offers wireless broadband for $49.95 a month to mostly rural customers who can't get high-speed Internet access from a local phone company. The service currently has 380,000 subscribers, a 10% increase in the last six months, but could likely do much better if it was marketed alongside Sirius radio.

      Liberty and Sirius XM are likely to weigh combining operations,

      THINK *

    • This week two of the building blocks that will eventually lead to a $10/share price tag on SIRI fell into place. One you noticed, one you didn't. One might be positive a short term catalyst for the stock. The other is a massive negative for the PPS. You better understand both before we get to Part 3.
      The positive was the apparent reintroduction of Backseat TV into the retail market. You probably noticed that Best Buy is giving you a free receiver with the purchase of a qualifying Audiovox product.
      In order to understand what might be happening we have to go back to 2007 when B TV was introduced. SIRI developed the technology and B TV carried three channels for kids. The product was placed only in Chrysler products. It was never heavily advertised and few units were ever installed in the OEM channel. In 2010, Audiovox stopped supporting it in the retail market. The problem was that video eats up bandwidth and so it had limited utility to a sat RADIO company. There were some major tech problems that needed to be addressed
      The technology held promise and here is what one reviewer said in 2008. "There hasn't been an immediate rush by U.S. consumers to embrace mobile live television offerings like Backseat TV. It is just a matter of time before the mobile video lifestyle becomes popular..."
      You should have found it interesting that SIRI's suitors in 2009 were JM and Charlie Ergen, owner of DISH TV. SIRI owned the patents and had the OEM contracts that Sat TV does not have. Today representatives from Direct TV and Dish sit on the SIRI Board. Pure coincidence.
      In 2007 the tech problem dealt with Point of Origin. The signal from an audio and Video feed had to originate from the same point..SIRI sat.
      Today audio video networking and lan bridging techniques have progressed IN THEORY so that you can have a video feed from one point of origin and a audio feed from a second point of origin coming into an auto through the same repeater system as long as you have separate receivers. In English it means D TV could feed the B TV while SIRI feed LYNX in the front seat. Channels count would no longer be a problem since B TV would rely on D TV's bandwidth.
      The key to pricing is that B TV always required a separate sub AND activation of a SIRI sub. Now if B TV has been redesigned to take into account the new tech it could be a big winner for JM and SIRI.
      Just how big? Suppose SIRI's conversion rate was to jump from the current 46% to 60% because people wanted B TV. Any idea what that would do to the PPS?


    • The Duke,

      After the 2.26, what kind of dip do you expect? I won't be selling any @ 2.26 but will be adding to my position.

    • Ok, good stuff to know. Why do poker players like Texas Holdem so much as the best game it seems? Just curious. More drama/probability/skill in it?

      Still seems too early for the Fed to act here this week other than make noise as well and put in a verbal put.

      I do know something in my own company that I have seen significant cut backs like I have never seen before in the long time I have been working there and we are expecting next year to very difficult. LR

      • 1 Reply to lonerangercards
      • LR -

        I think your company is staring at the Fiscal Cliff. If GDP is only growing at 2% and we have a 3.5% rip about to hit in 2013 with no certainty in sight until the election, it's the prudent win/win. Cut your company budget and cliff, you've averted disaster. Cut your company budget and no cliff, you're staring at handsome profits. Europe is one problem. But we have problems on our own soil as well to deal with. Right now, the market seems to be betting on more QE from Bad Ben or that companies like yours keep cutting to make the numbers. But at some point, either scenario needs to point back to a path of REAL growth.

    • This bull sheet attempting to influence folks is a waste of time! Anybody with half a brain knows you are usually wrong with your scenarios. Duck take your hit and cover!

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