Why Sirius Radio (SIRI) Is Doomed
Jan 2nd, 2009 | By Andrew Snyder | Category: Stock Market InvestingDon’t let emotions get in the way of a solid investment strategy, says Andrew Snyder. Sirius XM Radio (NASDAQ:SIRI) is failing because of poor capital structure, a weak management team and an upside-down business model. The company’s stock – down 95% in 2008 – will soon be worthless. And that means even loyal Sirius investors should sell any shares they still own right now.
This from Today’s Financial News:
One of the most important rules of investing is to never get emotionally involved with your portfolio. Your positions must represent fundamentally sound companies with a strong potential to generate positive cash flows and growing earnings.
Unfortunately, too many Sirius XM Radio (NASDAQ:SIRI) investors are not heeding this advice. They have their hearts tied to the failing company and are paying desperately as Mel Karmazin rides the company into bankruptcy.
A quick glimpse at the comments following nearly every columnist’s bearish thoughts on Sirius prove my point. Judging by the amount of name calling, twisted facts and just plain lunacy present on so many Sirius-based message boards, it is obvious tensions are high and hopes are dim. Either that or fifth-graders are investing more than ever.
Let me get you a tissue
Unfortunately, with the value of their shares down to just $0.12, it is too late for many Sirius investors to find a path towards profitability. After all, when you are down 95% on the year, what is another couple of percentage points?
To blame the company’s problems on anything but poor capital structure, a weak management team and an upside-down business model is ludicrous.
Short sellers, analysts and hedge funds did not drive Sirius’ share price to where it is today. Instead, a lack of liquidity and huge amounts of dilution are taking money straight from the pockets of once-loyal investors.
If you want to make money off of this company, your best bet is to sell. Sell your satellite radio receiver on eBay and unload what is left of your shares. Both of them will be worthless soon enough.
Converting debt into worthless stock will do nothing for current shareholders but dilute their positions even further. Why do you think Moody’s just cut the company’s rating another notch? It was not because the rating agency thought Howard Stern was not funny.
If Wall Street thought the company had a viable plan to get rid of its billion-dollar debt load, shares would not be plummeting.
Sirius is a trap that emotional investors are pushing each other out of the way to fall into. Do not join them. Wall Street is no place for emotions, especially in this market.
Source: Don’t get all emotional on me
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Do you work for the NAB (National Association of Broadcasters – Free Static Radio)? Sure why not try and talk people into selling their shares so the company fails. I won't sell my shares if they skyrocket to $100. The radio future is Sirius XM! DON'T SELL YOUR SELLS QUITE YET! The feds are bailing out auto industry linked companies:
http://www.usatoday.com/money/autos/2009-01-01-au...
It's time to buy, buy, buy! If Sirius XM gets a bailout the shares will soar!
Then what happens to satellite radio???
Yawn. Numbers please.
"Sirius is a trap that emotional investors are pushing each other out of the way to fall into. Do not join them. Wall Street is no place for emotions, especially in this market."
Pretty bold statement considering everything you had written before it.
A well written article. I work for Sirius XM and can relate first hand that our business model is backwards. Spending is frivolous which is apparent from the top down. From the CEO’s poor risk/rewards decisions to employees not restraining on discrectionary costs. We still buy Star Bucks coffee, Redwing, Piston, Lions and Tiger suites (yes all 4), non-value added training classes, extraordinary travel expenses, clothing, furniture and above all we were told our 09 raise and 20% bonus is in tact. Great for us today, but it doesnt make me feel good to have a mind set of spending without regard, coupled with zero effort to conserve cash. All of this during a critical time when the company is debt laden to a point recovery is difficult. I don’t believe our stock will increase until a change at the top precipitates through the company and only then will we see the benifits of the merger. That is of course if there is still enough time.
Dear Mr.Radio, as an employee of Sirius XM, a bailout would be nice but highly unlikely. Satellite radio is obviously not essential to making an automoblile function. Just put yourself in the shoes of the politicians trying to explain to tax payers that their money was used to bail out non-essential businesses related to automobiles. There is only so much money to go around and the suppliers that make the "nice to have" stuff will have to pick themselves up by their boot straps and cut costs the old fashioned way – by pulling together and sacrificing. Are you sure you're not one of my co-workers at Sirius XM that cannot control your spending? There won't be a bailout for Siri stock.
I used to be a large Sirius / XM holder and sold everything when it was back at $.60, which was a level that I didn't think I'd see. To buy this stock now, with the debt owed and the current management in place is absolutely crazy. People that think they are going to by stock at $.12 and sell it down the road for $100 are very inexperienced and need to stay out of the stock market. Things don't work that way and even if they did get some kind of bailout (which I doubt) it's only going to mean that they are going to owe MORE money that is going to need to be paid back.
And no, I don't work for any free broadcasting agency, I actually have XM today. It's ok, and that I think is part of the problem, is that it's just 'OK'. In economic times like this, people aren't going to spend $12.99 a month on radio when they can get it for free. Couple this with poor management, a monster debt load and no real business plan and you've got a recipe for disaster.
Shareholders need to sell now. Once they file for bankruptcy your shares are truly going to be worthless.
Snyder sounds like the emotional one in his article. Apparently Audiovox doesn't share his pessimestic outlook…..
http://www.satellitetoday.com/st/headlines/29486….
There seems to be a lot of journalist trying to make a name for themselves knocking satellite radio these days. And they think the investors are the emotional fruitcakes…..wow.
Making money buying ANY stock requires the ability to ride the highs and lows. It's easy to pick on a stock when it's down. It really hasn't been that long since SIRI was at $4.00 you know. Almost every stock on the Nasdaq is well below what it was being traded for 6 months ago. SIRI is no exception.
Thanks for the link regarding Audiovox Bob! I've sold all my shares of Audiovox. I think the stock will drop fast after teaming with Sirius, especially if Sirius goes bankrupt and sticks Audiovox with a large unpaid debt.