Sirius XM Loses Its Beer Goggles

Sirius XM Radio (Nasdaq: SIRI  ) made its investors wait two days to discuss its fourth-quarter results. They will have to wait even longer if they want to know if the company is growing or shrinking.

Breaking from tradition, the satellite radio giant refused to provide guidance on its near-term subscriber targets. We're now shoulder-deep into the first quarter, do you really think that Sirius XM doesn't have a good read on how many -- or how few -- subscribers it will have by the end of the month?

Back in November, Sirius XM went out on a five-year limb. Now it's asking shareholders to throw away those 2009-2013 targets. The only metric it's keeping is its expectation to close out the year with more than $300 million in adjusted EBITDA.

Don't get me wrong. It's great to see Sirius XM stick to its operating cash flow gauge. However, since subscriber acquisition costs take a big bite out of that number, I don't think I like the implications of the company only providing its EBITDA metric.

Just say it, Sirius XM. You certainly won't be the only company to lose net subscribers this month. Mr. Market's giving everyone a mulligan. I'm not the only one who saw this coming, so just rip off the Band-Aid and come clean.

The company did have plenty of other things to say during the call:

  • Sirius XM justifies the hefty 15% coupon on the bailout loan from Liberty Media (Nasdaq: LINTA  ) , arguing that blue chips like General Electric (NYSE: GE  ) and Goldman Sachs (NYSE: GS  ) recently took handouts with chunky 10% interest rates. Maybe so, but those companies didn't also hand over 40% of the company, in addition to being on the hook for the principal being borrowed.
  • It mentioned the liquidation of Circuit City as problematic -- twice -- but that actually should have been a positive. The store by me was practically giving away XM receivers for $7 apiece in its final weekend. That stinks for liquidators, but it should give Sirius XM a near-term boost in gross subscriber additions. Besides, Sirius XM has been weak at the retail level for a few quarters now.
  • The company is trying to mine new channels for subscriptions. Beyond finally gearing up for an Apple (Nasdaq: AAPL  ) App Store release, Sirius XM is working with used car dealers, who will be financially motivated to get dormant receivers activated.
  • The car market stinks, but Sirius XM is expanding deals with automakers like Toyota (NYSE: TM  ) to help improve its market penetration rate from an impressive 52% of new cars coming out with factory-installed receivers.

So if Sirius XM is so forthcoming about all of these developments, why is it suddenly so tight-lipped about a quarter that ends in just a couple of weeks?

I'm guessing it goes back to your mom's cardinal rule: If you have nothing nice to say, blame it on the lack of visibility.

More news than static on Sirius XM:

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Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 12, 2009, at 2:41 PM, rrrllrrrll wrote:

    Nice Try Motley FOOLS.

  • Report this Comment On March 12, 2009, at 2:50 PM, m55555 wrote:

    respect? you guys should be tied to the wippen post,and good lord the things you've said and done to this wonderful business model?you are gonna lose this battle,this is the future period.

  • Report this Comment On March 12, 2009, at 3:15 PM, crafal wrote:

    Motley must be the most annoying place in the Finacial business, the have a comment for every stock, and they have a negative article for it as well as a possitive one for praticly every stock that's out there. These guys are sooooo desperate to get attention they just trow crap out left and right, everytime I check a stock I see these fools all over the place. STOP!! Shut THE F UP! They know nothing, and just keep clogging the financial news with their crap, which has 0 credibility. There isn't a stock that I check out where they have a comment like 4 or 5 times a day. God they are sooo F'n stupid

  • Report this Comment On March 12, 2009, at 3:18 PM, crafal wrote:

    Anyone who pays these idiots for advise are morons and should go to jail like your friend Madoff, or Jrkofff. Get a real job and use your brains

  • Report this Comment On March 12, 2009, at 3:24 PM, hypnorandy wrote:

    At a time when many of the finest and largest companies, e.g. Unilever, have decided it's best to not provide guidance in such uncertain times, you should understand guidance can only be detrimental down the road if you're even slightly off the mark. What percentage of companies are actually growing? Sirius is growing! It's common knowledge times are tough and car sales are down. This sounds so much like Fool's misguided and limited information which was provided on priceline.com a while back.... which has turned into a huge success now despite Fools logic.

    Bring some real news and insight to your stories!

  • Report this Comment On March 12, 2009, at 3:38 PM, MannySilva1 wrote:

    Negative sensational journalism, & journalism is very loosely used in this context. People actually pay you for your clouded views ?

  • Report this Comment On March 12, 2009, at 5:48 PM, chali2na wrote:

    Maybe you should learn how to spell before you bash the Fool just because you are in a bad mood. Sirius XM has issues despite how much you'll miss your Opie & Anthony when its gone.

  • Report this Comment On March 12, 2009, at 8:53 PM, kaninbuehcibai wrote:

    Rick, haven't you learnt to give proper and fair analysis?

    I have noticed that your comments are personal in nature, and the amount of recommendations i have gotten from your bloody FOOL site hasn't given me profits from the get go. I am a total fool for subscribing to this site.

    Last two months we saw you bashing SIRIUS XM many times and claiming that this company is a goner. Just like how cramer (the squirrel on crack) said that the company is toasted.

    You guys are really pathetic. I expect more from you guys. I expect a professional way of giving advise and opinions, and not the type that give advises or direction base on "I'm paid by someone to do this" or "i've lost alot , and i don't care what i say anymore" comments.

    Grow up will you.

  • Report this Comment On March 12, 2009, at 9:18 PM, Rasko wrote:

    Ok, Seriously. How can any of you criticize Rick's article that does nothing more than point out the obvious--SIRI is refusing to tell us the number which was most important for SIRI since its inception--subscriber growth. For years, all we heard from Sirius and its weak bride XM was how subscriber growth was all that really mattered. And now? Aside from the refusal to tell us the number, SIRI is hardly a model for a success. I want to believe in the company too, and still do, however faintly, but it is a long, long way from a fairy tale ending. As for you bums who show up here just to insult TMF, why do not post where the writer's are all gushing about SIRI's financial wizardry.

  • Report this Comment On March 12, 2009, at 10:45 PM, hypnorandy wrote:

    Who needs to read the obvious? If you don't have insights or new knowledge, you should find someone who does. CEO MK pointed out the low subscriber numbers were even lower because of the gloom and doom caused by folks like these, albeit serious and reasonable. Consumers stayed away, and that is exactly what you'd expect from them. Now that the big B is off the table, more consumers will at least consider the service, despite the poor "everything...economy, car sales, etc" driving most consumer goods companies. Churn stayed low, which suggests value for the money was stable.

    When you finally learn to analyze with insights, you might have something worthwhile to say. Until then, even the defenders of the Fool need to go back to Opportunity101.

  • Report this Comment On March 13, 2009, at 2:52 PM, Primalmale wrote:

    Financially struggling Sirius XM Radio Inc. is planning to stream its subscription radio service to the iPhone and iPod Touch devices from Apple Inc. beginning this spring.

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