Only a few folks celebrating at Sirius
Today's Financial News - Posted December 22, 2009
We are coming to the end of a pivotal year for Sirius XM Radio (NASDAQ:SIRI). With shares falling by nearly 30% in recent months, investors are wondering what is next.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): As we have seen on the political front, hope and change will only get you so far. Sure, those two emotion-inducing words got Obama elected, but now that he hasn’t delivered too much change and the electorate is losing hope, the nation’s leader is facing his lowest approval ratings yet.
It is a similar situation for Sirius XM Radio (NASDAQ:SIRI). Over the last year, investors have been touting the company’s future, especially since John Malone swept in and pulled the company from the grasp of bankruptcy.
But now, with 2009 ready to go into the history books, investors are starting to wonder if the year was worth all the hype. After all, this was supposed to be the year of all years for Sirius.
Looking at the company’s subscriber roster raises plenty of concern. Bullish shareholders will eagerly tell you how popular their company’s offerings have become and the rush of new listeners tuning in. But the figures beg to differ.
This time last year, Sirius has 19 million subscribers. Right now, that figure is just 18.5 million. In the year the company needed growth the most, its revenue base contracted.
So much for hope
Part of the reason for the decline was a horrific year for auto sales. With fewer consumers buying cars, fewer folks are buying radio units with Sirius receivers built in. This will have a lingering effect on revenues in future months.
To be bullish on Sirius you must be bullish on the automotive sector, and I don’t know too many folks shouting about the opportunities in Detroit.
And then, of course, there is the rising risk in Mr. Sirius himself, Howard Stern. Without this longhaired trash talker, Sirius would see its subscriber figures plunge.
Now that Stern’s five-year, $500 million contract is ready to expire, the well-leveraged negotiator is up to his same old tricks, threatening to leave Sirius if he doesn’t get what he “deserves.”
It’s a smart tactic, especially with the backing of a few million ever-loyal listeners, but it spells trouble for Sirius as the company tries to cut its costs even further. Remember, the company has yet to manage a profit. Another expensive contract could delay the event even further.
Delivering change… pocket change
Investors are right to be worried. After hitting a 52-week high of $0.78 per share, shareholders are now sitting on stock worth just $0.57.
A 27% decline is bad enough, but shares are just a stone’s throw away from a critical support level at $0.55. If share price dips below this level, hold onto your hats, the bottom may fall out.
If you happen to be one of the lucky investors that got in the stock at the year’s lows of just a nickel per share, congrats on a fabulous year. But most investors are sitting on much smaller gains, if any. Even worse, there are countless investors still sitting on shares they paid more than $5.00 a piece for.
These folks won’t ever see gains, and unfortunately, investors that got in near the year’s highs may be joining the club.
2010 does not look rosy for Sirius.
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4 Responses to “Only a few folks celebrating at Sirius”
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December 22nd, 2009 at 6:51 am
When will these bashers stop? “2010 does not look rosy for Sirius”?? I did not know that today’s financial news was Miss Cleo? Can you give me winning lottery numbers, too?
From what I gather, Sirius/XM is actually looking GREAT for 2010. Retail sales are much higher than expected, and when do those sales hit the balance sheet? That is right…2010. What about the Apple ties and the iPhone subs?
Here is my “Miss Cleo prediction”:
If you get out now, companies that have a vested interest in Sirius XM will gladly gobble up your shares, and THEY will have a “rosy” 2010.
Just because someone writes something doesn’t mean it is true. Reader beware!
December 24th, 2009 at 4:45 am
This is probably the most uninformed bashing article I have read to date…
1. Despite the awful economy SIRI reported break even profits for the prior quarter for the first time in their history!!! Next earnings release will prove SIRI to have their first profit EVER! In the most challenging of economic times!!!!!
2. Market penetration on new car sales is nearing 50%. If new car sales hit 11mil in 2010 this could mean nearly 5mil subscriptions.
3. Stern will NEVER go back to terrestrial radio.
4. CONTENT IS KING! Commercial free music! Stern, News, MLB, NFL, NASCAR content that cannot be had ANYWHERE else on radio!
5. Coast to coast coverage and possibly international expansion in the near future!
I could go on and on…
This author knows NOTHING of SIRI !!!!!!
December 27th, 2009 at 11:07 am
Who is behind those shady glasses in the header of this page? Just another so called finance advice page trying to swing the masses to do exactly what they want you to do – sell. It is a fact Sirius has been a manipulated stock by the media and the big institutions and big individual players has made millions at small investors expense. This site as well as the others will someday be recognized as contributors to reducing the common man’s wealth with misinformation and the site owners and management will go to jail. I will contribute my share of complaint filings to the SEC until the day comes. Happy Festivus!!
December 31st, 2009 at 10:37 pm
Re: Just because someone writes something doesn’t mean it is true. Reader beware! (written by: 4-Eva on Dec 22,2009 )
My thoughts!
When the economy is going strong, most will enjoy easy profits! But, when the opposite is the case, then many complain and blame others for their losses. Why? Because it’s always easier to blame others, than to accept responsibility for ones actions and decisions. Guess what
. The question is: Are you astute enough to recognize that truism or do you approach investing with the naivety of an overly expectant amateur looking for over night riches?
Whatever happened to exercising due diligence and relying on ones-self to make prudent decisions, concerning any investment? And knowing how to protect the investments you have?
Something as rudimentary as a Stop Loss, based upon sound Money Management? Or perhaps selling a Covered Put/Call, thereby hedging the position? Let us not forget trading, “Options” Ever hear of Shorting or Inverse ETF’s ? 8-/
In my opinion, and learned others as well, will concur that the single most common cause for failure in investing, is Poor Money Management. Note# 90% plus fail for a reason, even in the Good Times.
With all due respect for anyone involved in any aspect of investing, I submit that those who rely on others, (The self proclaimed Guru’s) to make investment decisions for them, would be better served by having professionals with a reputable firm, manage their monies… Otherwise, if you’re determined to “Pull the Trigger” on your trades, be realistic about whom is responsible for those decisions and refrain from blaming others for losses. Money Management First and Foremost !!!!.