Friday, April 1, 2011

Is Sirius XM (SIRI) Doomed?

No matter how much its fans attempt to push the share price of Sirius (NASDAQ:SIRI) up, it seems a couple of new bits of negative news manages to push the company down again.

The latest is the lawsuit by shareholders who say the company has reneged on its promise to not increase prices when they were granted permission to merge with XM.

Shareholders claim Sirius has boosted prices as high as 40 percent from the time of that promise.

There is also the lawsuit by Howard Stern which could have a significant impact on the company, especially if things get ugly there.

But probably more important than those one-time events are the health of the auto industry, which while struggling, appeared to be on the move again before the earthquake in Japan has brought it under extreme pressure.

While downplaying the effects at this time in order to keep investors from bolting, auto companies like Ford (NYSE:F), GM (NYSE:GM), Toyota (NYSE:TM) and Honda (NYSE:HMC) are far from certain as to their short term future, as parts are already causing a lot of pressure at the companies, and if that remains to be the situation, it'll dramatically impact the industry, and by extension, the performance of Sirius as well, which is almost completely dependent on it for growth and earnings.

Finally, churn rate at the satellite company has also increased, rising from 1.7 percent in 2007 to 1.9 percent in 2010. Difficult economic conditions could cause that to go even higher, as the price of gas always results in secondary services like Sirius in people's lives to be dropped.

That could happen very quickly if gas prices rise to levels predicted over the summer months.

Much of the positive sentiment from fans of Sirius is based on best-case-scenarios, which are rapidly crumbling under the reality of the forces mentioned above.

Sirius closed Thursday at $1.65, dropping $0.07, or 3.79 percent.

17 comments:

Anonymous said...

you are about the dumbest mf you should go work for seeking alpha

Anonymous said...

Obviously a shorty with this bullsh** doomsday editorial. Way to twist the churn number and omit the astronomical rise in new subs in that same time frame. FAIL

Anonymous said...

I am sure people are going to quit driving and listening to their radios. The bottom line is that once you have SIRUS, you dont go back to mindless commercial terrestial radio.

mvecho said...

I agree, I think i spent literally a total of 10 minutes in the last two years on regular radio and it was a waste of time. I'm sure most who have Sirius will agree.

Anonymous said...

Okay, here's my opinion, coming from a person who has held it all the way from $2 to .05, re-bought to lower by dollar per share average, and back up again. I sold recently, I made 60+% I did not like how the stock was trending, I am still watching closely, might re-buy before the next quarterly earnings are released because whenever its a good report, it doesn't move and when it's bad it shoots down for the day then comes back up to level at the end of the day. So I personally am just waiting until more positive movement, but it has gone stale for more than a month in the past and then started it's even upward tick of a few cents a week. So, I will re-buy if I see this momentum in the near future. This stocks moves steady, but is not a huge jumper. Anyone agree, disagree? Would appreciate input from someone other than author, lol.

Anonymous said...

Facts only please.
1 Shareholders are not the ones in the suit. FACT

2 Projected auto sales are on the rise. Production may be down temporarily. FACT

3 Indicators show economy on the rise. todays employment numbers are FACT.

4 Your churn numbers need to take into account the steady increase in subs. FACT

Anonymous said...

Really sorry that I read this trash

Burnbabyburn said...

What are the credentials of the person that wrote this article? "Shareholders" are certainly not the ones suing the company over a price increase, SUBSCRIBERS are, nimwit. Why in the hell would shareholders sue for reasons that would benefit them as shareholders? So much for any credibility, Gary, or whoever is behind the article.

roncool said...

Is your company hiring . I fix heaters and I could write a half baked article like you did . you don't get paid for that type of research do you ?

I have no position in Sirius, just think the product servers a real need, has a exclusive, and thru it's content lends itself to a lot of different groups of liserners that are willing to pay for the service.

I will challange anyone to point out another medium that has so much potential , and at the same time keeps walking the talk with increases in subs and cost reductions and debt repayments as this company is doing day after day , and yet we get you, go figer

Anonymous said...

I bought 300,000 at 12 cents. Too bad these idiot Analysts didn't do the same....What a bunch of losers.... I am holding. I will not sell unless there is a buy out offer. Siri can start paying me dividends. :)

Anonymous said...

You should remove your ARTICLE A.S.A.P because as shareholders we will sue you. YOU HAVE BEEN WARNED.
You are an absolute JACKA$$,you know nothing

Anonymous said...

Anon 9:52 AM

I think you are absolutely correct on the pattern. I have only been watching SIRI for a couple of months and I already noticed that pattern.

Another funny thing is that I only discovered Seeking Alpha about 2 weeks ago, and now I will never read another article from there, so Anon 9:14 AM's post killed me!

This and that site is run by a bunch of morons! hahahaha

Anonymous said...

Doomed? Now that's funny.

Anonymous said...

Sirius only rebounded from 5 cents a share to nearly $2. You know. No big deal. Let's all start jumping out the window because of a 7 cent setback. I'm staying long this time. I regret the fact that I sold 20,000 shares at 40 cents.

Anonymous said...

Yep - We are all doomed!!! Sirus will be gone in 10,9,8,...

Anonymous said...

who ever wrote this article need to get fired !!!!!!!!!it the subcriber suit action doing this and they (this anlyst need another job)are trying to bring this stock down why??????

Anonymous said...

who ever wrote this article need to get fired !!!!!!!!!it the subcriber suit action doing this and they (this anlyst need another job)are trying to bring this stock down why??????