By Brandon Matthews
The results are in and despite the market’s focus on horrible September auto sales data or its year over year comparisons, the results for Q3 are exceptional from a Satellite Radio perspective. Looking at the overall numbers, clearly Sirius XM Radio (SIRI) is on track to report better than expected subscriber numbers when it announces its quarterly results next month. Below is a breakdown of 2009 annual auto sales and the numbers not being reported anywhere else indicate that for the first time this year, the 3 million vehicle mark has been broken. This is the second sequential rise in quarterly auto sales since the bottom was hit in the first quarter of this year.
A first look at the numbers reveals that the Sirius XM partners that offer the highest installation rates such as Hyundai and Kia of 100%, reported a rise in sales not only for September but for the quarter as a whole.
A basic overview of the numbers reveals that in Q1 and based on 2.2 million vehicles sold, Sirius XM lost 400,000 subscribers. In Q2, auto sales increased by 400,000 vehicles, and Sirius XM reported a lower loss of 185,000. If basic math holds true, the addition of over 400,000 more new car sales should put Sirius XM subscribers in the black for Q3.
Ford (F) and Chrysler which pay for 1 year subscriptions at the time of production on behalf of their customers have both announced increases in production beginning in September which can only add to the total of expected subscribers.
Combining this data with an expected increase in subscribers resulting from Certified Preowned Programs instituted this year, increased penetration rates and new product placements such as the Toyota Camry, only a Fool could assume that Sirius XM Radio will report anything but positive subscriber growth for the quarter.
I have yet to crunch the numbers in depth and will report on those findings in the coming week, however I feel confident that the company will report 150,000 or more net subscriber additions for Q3 based on the initial data.
Position: Long SIRI
are those numbers for Audi and Acura correct??(8kish per month) Lexus outsells them so much??
+150,000 subs would be nice.
this will be a nice report to be true. I respect the fact that Brandon you have stuck your neck out there and have put yourself on the line. If you are correct praises and adolations will flow your way, if you are wrong…well, a couple of Fools will be dancing in the streets. It’s do or die for your analysis skills. My hope is you are correct as I enjoy reading your articles.
Great article Brandon (once again),
Positive subs are a given for Q3……also, don’t forget about the FULL quarter with the I-Phone application. Things are looking up, despite the current drop of the shareprice.
(EPS=$.00)
Excellent news and analysis. The markets now are certainly awaiting validation of all favorable expectations and should remain cautiously on hold pending the 3rd Qtr. release which will be the reality check that is required to sustain further advances.
Brandon, I am glad that you and your associates are reporting the facts. I wish the negative, False and erroneous reporting would stop, but you can’t do too much about ignorance. I can’t believe the irresponsible journalists, who write false articles or the ones, who write bad articles based on the false articles. They are equally at fault. All I can say is Go Sirius! Go Satwaves!
Thanks Brandon for getting out this excellent report and analysis so promptly. You can be sure that the media bashers (a FOOL, etc.) will be producing articles to put a negative slant to the September figures so this article helps preempt their misinformation. Positive subs looks better and better for the 3q. Wouldn’t be surprised if they exceed 150,000 with all the other programs that have been initiated such as pr-owned autos, etc.
I don’t see a rise in sales in September for Hyundai and Kia. Both show significantly lower sales in Sept than Jul or Aug.
@anon
(PR)Hyundai (HYMLF.PK) September U.S. sales: +27% to 31,511 vehicles. Sonata sales -9% to 7,898; Elantra +104% to 7,513; Santa Fe up 50% to 7,010.
Kia September U.S. sales: +24% to 21,623 to finish its best-ever quarter. Optima +214% to 5,986 vehicles. New compact sedan Forte sells 4,449 units
Hyundai was 45K in July and 60K in Aug.
Kia was 29K in July and 40K in Aug.
What are you comparing to?
@anon
Sept 2008 to Sept 2009
Maffei said Sirius bottommed the day after their 2Q call.
In addition to the 3M car sales, there was also a ramp up by Ford, Chrysler and others that have not shown up as sales, but will give up front cash and subs to Sirius in 3rd/4th Q.
I am as bullish as ever on where we will be by February and I am very surprised at the downward pressure still.
I feel we will at least be at .75 going into the 3Q CC and with possible net sub increase of 170k, the stock is 30% below where it probably should be today.
$1.00 by Feb 8th year end CC looks like a lock.
If you take an overly simple linear approach based on the last two quarters, the number is more like 40,000 subs due to 3,000,000 vehicles being sold. Still positive, but I’m sure there is more two it than drawing a straight line through 2 data points LOL.
Not clear that that is what the article is talking about since it presents data only for 2009.
Congratulations Satwaves. On my Google homepage quote you are listed under SIRI news, along with the ‘FOOL’. Maybe we can now get some facts instead of the slanted half-truths.
@Mike
My 170k subs is a gut feel from owning this stock for so many years and seeing the strides they have made lately with cust service & retention, pre-owned trials sub program and cost cutting.
That’s my net sub increase# and I’m sticking to it.
We’ll touch .90 cents the day of the 3Q CC.
I’m curious to see how many subscribers they lose. With unemployment rising things like satellite radio will be a luxury people don’t need. I myself have already ditched satellite tv, but I’ve kept Sirius cause I’m on the lifetime plan. I don’t think Sirius is headed towards bankruptcy as the latest poll suggested, but their is a lot of uncertainty for companies like Sirius.
@sxminvestor
Re: your comment “..I am very surprised at the downward pressure still” – there is still a lot of manipulation going on with this stock. SIRI has been under a concerted attack for months, via a combination of naked short selling, high speed computer related FlashTrading, and coordinated negative misprepresentations in the media. This is very close to the scenario thoroughly detailed in the article “Wall Street’s Naked Swindle” in the current edition of Rolling Stone. It is clear the apparatus remains intact and we see it at work in SIRI’s trading. No wonder this stock is being held back – Hopefully the SEC and Congress is now watching this more closely and under pressure to take appropriate action.
Well you can bet that the media will still focus on Q1 and Q2 no matter how great Q3 will be. Also, do we have a CEO? At least he could come off the golf course to say something about the incorrect bashing going on in the media.
Mike-
Do your homework – they will not lose any this quarter. If your posting this because you are bashing or hopiing to get the stock lower – the true investors holding firm can see right through this.
Just saw a very effective ad for Sirius XM Satellite Radio (Three month trial) paired with a major ad for Mercedes Certified Pre-Owned vehicles. This ad is in today’s Wall Street Journal – Weekend Journal – Page3 W1. Sirius is mentioned in the commentary and the Sirius logo is prominently displayed on the photo of the featured Mercedes-Benz autos.
A high quality presentation all around.
subs at 142k
@anon
I can see how u read it that way? Total sales though for Hyundia and Kia for 3q were higher then either 1st or 2nd qtr of 2009. With the end to cfc almost all companies reported sales down for the month compared to August 09…that was expected. Compared to 2008, Sept, 2009 sales were significantly higher…a very important indication of even better things to come for these two car makers…and of course SIRIUSXM having a 100% installation rate.
@Mike
I agree that with unemployment rising, SIRIUS XM will lose customers due to that. However, Unemployment has been rising for a bout a year and of cours SIRIUS XM has felt the effects…Hopefully, we are nearing a bottom of unemployment and things will get better. Also, why do you think SIRIUS XM is any different than any other company that depends on sales of services? During a recession, the numbers will be down. People still have cell phones, satelite tv, go to the movies, eat at out….people still buy $3.00 coffees..lol..maybe it cost more….i don’t drink coffe.. The point is…Even in a recession, many people still have $15.00 a month for entertainment…$15.00 for most people is not luxury entertainment….I don’t even think you can buy two adult movie tickets for $15.00 anymore…much less popcorn….Do people still go to the movies in a recession???yes..You cancelled your satelite tv? Well…I bet yopur satelite tv bill was a lot more than $15.00
If SIRIUS XM, can show a positive subscriber growth this quarter, I think all the bankruptcy lies will stop. The reason for the bankruptcy fear is that they continue to lose custoemers and are in debt. A company in debt needs to grow, not shring in subscriber base. Once SIRIUS XM can show they are back on track to gaining subscribers, the stock will jump. I trust Mel K, he did say I believe inthe 1st quarter meeting that at that point they were not concentrating on new subscribers, but maximizing revenue. So, they added some charges that they felt would do that, with the bottom line being higher revenue , and weighing the negative effect of increase prices losing some customers. Now, obviously with new products and deals, they are going for new subscribers…I have a feeling they have some plans for this holiday season to boost subs….$+1.00 here we come!
RAF, SEC Docs came out today showing brass at Sirius Xm selling off some shares. Is this anything to worry about in your opinion? Thanks, Neal
@seriouslee
Why? I think Mel is smart to stay quiet…the company results will speak for him…I believe in the expression, “Keep your friends close, but your enemies even closer”. It will soon be obvious that the company’s fundamentals have turned positive and for these media bashers to maintain any credibility, they will no longer bash the company. Mel will then need them to promote the company…no point in getting into any kind of p***ing match with these folks at this time.
I’ve followed SIRI since it hit 5 cents. It’s fascinating that in an atmosphere of a global recession of severity and length not seen since the 30s, which has come just after an immense merger between Sirius and XM (in which competitors have become one with no further competition in the same technology space), despite Liberty’s liquidity infusion, restructuring and re-financing of some debt, changes in S & P credit ratings, commitments from John Malone of further financial shoring-up when and if necessary; improving auto numbers in July and August thanks to Cash-For -Clunkers (despite Sept. sales); despite Chrysler and GM bankruptcies and an auto sales downturn not seen in 40 years I believe; increases in forecasted revenue; the introduction of an iPhone app that at one point was the second most popular app download; the introduction of the soon to be released (Oct. 19) Skydock, which should be a hugely successful transformative, accessory for over 40,000,000. iPhone and iPod users (and increasing rapidly); despite a very small erosion of subscriptions compared to an 18,000,000+ base during a year of potential economic Armageddon (within several days of complete economic collapse of the banking system had Bernanke et al not taken emergency action immediately which in reality would have spiralled into political, social, and economic anarchy within several days unparalled in U.S. history); despite a capitalization of $2.6 billion as a penny stock presently; despite programming that is dynamic and unparalleled in other radio or internet space while continuing to expand regularly and while adapting to current events and news (ie. Ted Kennedy’s tribute) immediately! (incredibly value to our culture and education); despite a $1600% gain from $.05; despite analyst ratings that consider it a Strong Buy to a Moderate Buy; despite the top media analyst giving it a share price target increase to $1.00 (as well as S&P), and despite the recession having ended officially, which has obviously affected discretionary spending (with a near 10% unemployment rate and a heavily deflated home-price market and a deeply leveraged, resource tapped-out U.S. consumer-base), which should lead to improved auto sales in the next 1-3 years; despite as mentioned the creation of other sources of revenue (Skydock) beyond autos through a relationship with Apple, a technology company leading a technology, market- share- expanding revolution in the U.S. as well as emerging markets (China coming); despite all of this, there are heavy influences affecting the stock price (short positions) that ultimately must know what’s coming with the effect of the Cash-For-Clunkers program, the Skydock, and the 3rd Quarter earnings and company report! This is a phenomenal technology, and it’s a company that got caught with a costly merger going into a wild economic storm a year ago. There won’t be a need for a reverse stock split as the momentum based on shorts being forced to buy quickly as the stock price gains momentum in the next three weeks will propel it above $1.00 (or into 3Q earnings) to appease NASDAQ (although SIRI could ultimately be a stock that reacted well to a reverse stock split if absolutely necessary). While it’s difficult to have a heavily-invested position in SIRI while watching it trade in the lower 60s this week, it’s ok having the near-term perspective of what’s coming despite attemps at manipulation of its price. The bankrupcy “poll” headline this week was atrocious and manipulative. It was written as an official headline from an official, credible news source, but was a subjective, website poll with intentions to convince shareholders that bankrupcy was imminent. How absurd! It was dishonest and manipulative, but because of the true, positive momentum SIRI has, will be a short-lived manipulation. If anything, it gives true SIRI-believers a chance to dollar-cost average and make more profit in the next 1-4 months! I’m not an economist, and I’m new to investing, but it’s clear to me that in the near-term and in the longer-term as SIRI takes on its debt issues and continues to build its product- base and consumer-base through new technology products and applications beyond the auto industry (but including it of course)and its equity capitalization, it’s going to be a company to watch, pay attention to, and own. In this contemporary,complicated, dynamic, information-loaded, global, and technological culture and world, it is clear to me that Sirius/XM radio is not an indulgence -it’s relatively mandatory. It’s been ignored since it was at .05 by Wall Street essentially, and it’s rarely been mentioned as a stock to speculate in, despite a 1600% climb in 8 months with a relatively consistently-climbing price trajectory up in the darkest days of this year. It’s resurgence is close. It’s a company and a technology to be proud of to say the least. It contributes to our culture, and there’s certainly an equity price payoff for those that believe. Thanks.
@Neal Barkett
I don’t know, Neal. Probably only planned selling of compensation related shares, which officers of corporations tend to do regardless of their opinions about prospects going forward.
Great article Brandon.
Why are we not loading up on shares now? This is the absolute perfect time to buy in. It is the first time we have dipped below the .60s in a bit, and with news like this coming down the pike, if you can get in at .50 – .59 you are getting a bargain.
My very humble opinion is that the media bashers and shorts are out now to bring the price as low as possible before the good news comes out. I say let them do their job so WE can load up on the shares at a better price. There is no way that the pps is going down after Q3 results in Nov. So, consider your entry point in between a range of profit. Getting in early could mean more profit. Getting in late could mean less (or vice-versa). Either way, you will come out on the positive side. Heck, Q4 should be the first time SIRI turns a profit….not EBITDA either!! Since time is your most valuable asset, invest in a company that will make you $ so you can go out fishing while your money works for YOU. =)
Good luck all!
Another important # that investors need to take into consideration that will help with the growth of subs is the penetration rate increasing year over year. Are we at 60% by now. What if we were at 70, 80 or even 90 in the future ?
Is it unreasonable to assume that maybe 5% of Iphone/Touch users would buy the skydock and sign up for the service.
5% of 50M is 2.5 million subs over the next year.
I don’t think my number is greedy or am I missing something ?
Neal,
Those shares were pre planned sale of compensatory shares for certain management team members who are part of a 10-5b sales incentive plan. No need to worry about them. They are scheduled to be selling shares based on the plan filing which can be viewed on the company website under SEC filings. It was a way for SIRIUS XM to compensate employees without paying them in cash and is actually beneficial to the company balance sheet.
sxmin, what you are missing is that you don’t need to sign up for the service when you buy the skydock. People will buy the skydock to listen to any other iPhone app including itunes, pandora, etc. Unlike their other line of Sat Radios, these SkyDocks can be used for anything. So, inturn, a whole new stream of revenue and marketing for potential sub growth due to the device already having a sat receiver built-in and a big XM on it
This is a very exciting time to own siri, Q3 and Q4 will be fun!
@Nate
I have heard other people ,Brandon Mathews,say that some people will buy the skydock and not sign up for the service I have to disagree. The skydock is a good gadget for those that want satelite radio. However, if you want to listen to your ipod touch or ipod in your car, No one spend $119.00 for a dock. There are much cheaper alternatives. First, a charger and FM modulator can be bought for about $20.00…If you want a apples to apples comparison..go to the apple store. They already sell a BELKIN dock that is a charger and FM modulator…It sells for $89.99. Why would someone spend an extra $30.00 if they dont want satelite? I was in the store and watched people look at the Belkin product, put it down because of the price and find cheaper alternatives….Also, realize, most cars have an AUX input for sound..they are called ipod jacks…all most people need is a car charger for their Ipod…..No one need to spend $119.00….unless you want XM with your ipod…I am an investor as well…but let’s not kid ourselves that SIRIUS XM has designed a device that will sell because it is a great device. SIRIUS XM will sell because of content….If the person doesnt want the content…the SKYDOCK is a silly purchase….unless you like to waste your money…It would be comparable to buying a $120.00 xm dock and play radio for the casette adapter to use with your ipod…lol…buy the casette adapter for $5.00…..buy the car charger and AUX jack or modulator for $5.00 if you know where to shop…or at most $30.00!!!buy an XM skydock to listen to Pandora or your Mp3’s…are we that deliusional about this company? SIRIUS XM should give up on designing hardware…open it up to all, like they promised the FCC and focus on Content..and promotion of that Content!!!
@sxminvestor
5% is not unreasonable, however it will not come unless SIRIUS XM decides to have a marketing campaign based on talent. I did notice advertisements for the Iphone app on billboards and newspapers. However, those ads seem to want to celebrate SIRIUS XM being available on the Iphone/ipod touch. It assumed that iphon/ipod touch users wanted to listen to SIRIUS XM and the only thing holding them back was the hardware. I did not see the many personalities of SIRIUS XM going out to attract customers. This has not been done in years. Has the company become complacent with their monopoly status? They both use to run commercials when they competedagainst each other. Sirius XM needs to make people who never listened to satelite want to listen to satelite. Reguardless of weather they have an ipod/iphone/new car etc….A person with an Ipod/ipod touch is no more a potential customer than the average driver. In my opinion…an iphone user is less likelly to get satelite than a non iphone user. Iphone users tend to love free apps and their massive playlists…They tend to be “techies” and are willing to set up Pandora on their iphone…download podcasts…etc…They do all they can to avoid spending any more money on audio entertainment…..On the other hand…a driver without an ipod is a prime candidate for SIRIUS XM….this customer tends to not have time or will to download songs, or podcasts…they don’t want to hook up their phone or mp3 player to their car and have to actively choose their entertainment….they would like to just get in the car, choose a station and go….Music, talk, whatever….Ipod/iphone users love thier playlists……I have had people with ipods in my car….lol….they request that I turn off my XM radio…so they can play their favorite songs…..I tell them to shut up….I’d rather have a professional dj like whoo kidd than listen to their dumb playlists…..that is a reality….SIRIUS XM has to find a niche for each potential apple user to get them to join…For example..Howard Stern fans, oprah fans, Sports niche, comedy niche….Things they can’t get easily if at all on their ipod/iphone…
how about this for a new take on the promotions/marketing: they didn’t push for new subs prior to fee increase because they didn’t want too many people complaining that the price ‘increased’ at the end of july. Now when people sign up, all the fees are added into it already so people aren’t shocked or upset. Now that the new fees have taken effect, they can promote and promote with no new increases for awhile on all new subs signed after this past July. Understand?