By Brandon Matthews
In another exclusive Satwaves Radio interview, Senior Analyst Murray Arenson of Janco Partners called in to discuss the reasons for the firm’s resumption of coverage of Sirius XM Radio (SIRI), with an accumulate rating and .80 price target. Mr. Arenson brilliantly ran a gauntlet of questions as he highlighted both the pros and cons of Sirius XM Radio’s business model.
Arenson began by discussing the positive momentum trends seen in 2009 including growing free cash flows, a return to positive subscriber growth, the potential effects of Certified Preowned Programs, incremental revenue growth, royalty pass-throughs and cost efficiencies. This in-depth interview included discussions of the current ad campaign as well as the potential benefit of very low subscriber acquisition costs (SAC) with regards to not only CPO programs but the potential for “vin number” or private party transactions level promotions as well.
Liberty Media’s (LMDIA) potential interest in Sirius XM Radio was also discussed including the now famous $8 billion in NOL’s, which makes the company more attractive to a company like Liberty based on the history of John Malone. Arenson also touched on potential cross marketing opportunities between Sirius XM and Direct TV (DTV) as mentioned by Dr. Malone last week on CNBC.
On the issue of a potential reverse split, Mr. Arenson does not foresee Sirius XM implementing a reverse split anytime soon. He is under the impression that the company currently sees no need to institute a reverse split and believes that the company will first exhaust every possible remedy before doing so. He also believes that doing so would be a net positive for the company from an institutional ownership perspective, explaining that Sirius XM’s current share price remains a barrier to significant institutional ownership.
Position: Long SIRI
This Satwaves Radio show was quite good, and very informative from a shareholder perspective. I hope that people who were unable to tune in live have listened to the recorded version.
Thanks to Demian and Brandon for the interview, and for another good show.
I agree with all of the above – except I continue to feel a reverse split should await further developments into 2010, when such action can be taken from strength. Given all the positives that are now being seen with Sirius XM, there is a better than even chance that SIRI will be trading significantly higher than the low .60’s after yearend, as volume is now reflecting the closing of books, etc. As any reverse split derives value from the levels preceding the split, why give away this potential (and probable) increase in value that should come by waiting until the 4th Qtr. release, due in February, at the earliest? The much enhanced marketing program has just been initiated and Mel has projected increasing free cash flow through 2010. It is all systems go for this company, so let’s not take any premature actions that would sell this potential short.
Very nice interview, Demian/Brandon! You guys are doing an excellent job in scheduling superb guests. I hope anyone who didn’t get a chance to hear the show will listen to a replay esp., if you are a shareholder or thinking about buying. I think it’s important to note that Mr. Arenson does not foresee a R/S anytime soon so if that is a reason why one is holding back from a taking a position or adding to one’s position you may be missing an opportunity since the stock price is sure to rise with all the good news that is showing how successful the company has been and continues to be in turning this company into a real success story!
Thanks guy’s for broadcasting the interview.
Very good infomation to digest… Looks like
SIRIUS is well positioned to take advantage in the new markets that their tapping into… Looks like increase in subscriber #’s due to increased car sales will be the #1 driver of new business for SIRIUS… I’m very incouraged
by SIRIUS expanded ad campaigns, as well as agressive used car market campaign… SIRIUS is improving it’s FREE CASH FLOW whick is fantastic…Looks very good for SIRIUS in the coming weeks and on into 2010… I think the technicals are looking real good for SIRIUS and I wouldn’t be surprised to see SIRI trading at around a dollar by year end… SIRIUS is clearly right around the corner of breaking out. Charts are looking good for SIRIUS and ready to explode real soon…
All this cheerleading for so many years but nothing happening but the stock declining.
Dont get me wrong I hink your great,great childeren will be happy you bought Siri stock but don’t think you will enjoy the fruits of this investment in our life time.
Oh yes look Siri is up a penny on this news.