Just Split Already, Sirius XM

• Report this Comment On April 09, 2010, at 12:33 PM, Cool700 wrote:

  Because a reverse split would cause many subscribers who hold the stock to cancel their subscriptions.

  because where is the value? If I have 10 one dollar bills and get one 10 dollar bill in exchange how did that give me more money? It does not. You do however end up with less shares.

  I always thought a reverse split was candy for shorts.

  Sirius XM does not trade like other stocks do that's why.

• Report this Comment On April 09, 2010, at 12:48 PM, Fredlee009 wrote:

  If you wanted to know the reasons against it you would have by now. Since you dont list the reasons, Im assuming your afraid of them. Thats ok, Ill do it for you.

  1. Opens shortside risk when there shouldnt be any.

  2. Hundreds of stocks have more shares, and its never a good idea to do a r/s to reduce float. Go notice who does it for fun.

  3. It erodes gain potential. Easier to clear out the 1.87 bonds if they dont r/s. Easier to get to 1.87 from here, than 10.87 or more.

  There are many other reasons. Some too complicated for you to understand. But certain sites out there do offer these reasons. Go look for them, and do some due diligence.

• Report this Comment On April 09, 2010, at 12:49 PM, BuffettIII wrote:

  Mr. Rick Aristotle Munarriz :

  Few shareholders want to dilute their position. You already hit the nail on the head. Historically reverse splits fail dismally.

  Statistically, it is not a high percentage play. It is the equivalent of trying a 64 yard field goal. Can it be done successfully? Sure, on occasion. Mathematically speaking, the coach is better off not calling the play unless the game is in the final seconds and there are no other options left.

  Sirius XM shareholders are not a risk averse lot, as you well know. They're willing to wait on the razor's edge, and so is Mel. In the end, Mr. Karmazin will do whatever it takes to keep the company listed.

  In other news......

  The stock's record breaking volume this week accompanied by a modest price changes smacks of hidden agendas. Someone is executing a very large and very sophisticated maneuever that would make General Patton proud. One can only guess who has the stones, bucks and motives to pull that one off.

  SIRI long

  Buffett III

• Report this Comment On April 09, 2010, at 12:50 PM, Cool700 wrote:

  A reverse split would cause many who hold the SIRI stock to cancel their subscriptions.

  If you have 10 one dollar bills....then in exchange somebody gives you one 10 dollar bill what is the difference? You still have $10 dollars! Where is the value?

  Shorts love reverse splits. To them they are candy!

  SIRI does not trade like any other stock. You can not compare to what other companies have done in the past.

  The only traders or investors I know that want a reverse split are those who are shorting.

• Report this Comment On April 09, 2010, at 12:53 PM, Cool700 wrote:

  Just not a smart move since there is plenty of time left to trade over the one dollar mark for 10 days.

  The NASDAQ loves the volume anyway.

• Report this Comment On April 09, 2010, at 1:02 PM, kemo62 wrote:

  Re: Why Reverse Split Fears? 18-Mar-10 08:25 am Pasted here is my post of march 12th

  reverse split I hope not 12-Mar-10 09:16 am Folks ask "whats bad about a R/s" I say it takes away your leverage in your position of the common stock The more shares you have at a lower price,the better chance of making more money. If your sitting on a loss in this stock A r/s will lock it in

  Consider this:(just as an example)

  If a person is in seri At $4.00 and the current pps is $1.00 it has to gain $3.00 more to break even. ($4.00) Lets say you have 1000 shares

  if there is a 1/50 reverse split you now have 20 shares worth $50.00 each. the shares would have to go up $150.00 To a break even point of $200.00 pps

  I think seri can get to $4.00 from here

  Siri at $4.00 will happen

  Siri at $200.00 ?? I dont think so!!

  Do the math use any metrics of price and split values and I think you will agree that share holders will be better off if seri does not split and the PPs will get to middle single digets on its own. To those who say 20 shares @$50.00 is the same as 1000 shares @$1.00 I say that is a gross over simplafacation when considering anything other than face value, not trading gains or price apprecation. fact!!!--- not JMHO Rating :

  (6 Ratings)

  And as for AIG doing better after the rs go back to historical prices of Aig and you will see that anyone holding Aig before the the stock crashed in sept 2008 will never get back to those levels after the reduced share count of the 1/20 rs

• Report this Comment On April 09, 2010, at 1:54 PM, PCDonovan wrote:

  I consider myself a "casual investor", meaning I don't have the funds to make big ticket stock purchases, and I am much more inclined to buy a stock that is priced < $5 than I am to go for the higher priced companies.

  I assume that there are enough of us "casual investors" that would be discouraged by a reverse-split that it would be harmful for the company.

  I've been buying SIRI for almost a year, since it was in the .30 range. I don't intend on giving it up any time soon. But if a reverse-split becomes a reality, I may have to rethink that position.

• Report this Comment On April 09, 2010, at 2:13 PM, thejuice31 wrote:

  I think the arguments on both sides (split vs. no split) are pretty weak.

  Institutional ownership argument - Institutions are already comfortable buying SIRI because the market cap is about $3-4B since February (before dilution considerations). It's not your standard "penny stock" where the market cap is close to zero. The quarterly institutional ownership updates support the assertion the institutions are increasing positions in SIRI.

  Increase short after split argument - The current beakeven earnings and future expected positive earnings will prevent the predicted post-split shorting. Most companies that are shorted after a split are consistently losing money. Profitable companies, like SIRI in 2010, hold their value.

  I wish I could offer a solution, but I've got nothing. I'm not really sure one is even needd. It seems like a pointless argument. We all know the NASDAQ won't delist SIRI because of the revenue they get from the volume. Addtionally, a split would probably hurt the NASDAQ because retail daytraders may have to scale back trading volume. The market cap and enterprise value are what they are no matter how many shares are outstanding.

  Aristotle, you are one of my favorite SIRI writer/bloggers - But can we move on to a better topic?

• Report this Comment On April 09, 2010, at 2:29 PM, BigVincent wrote:

  The problem with a reverse split is that it will essentially wipe out any long term investor that invested at about $3.50 or higher. Its because of the dillution process that the stock which was $7 almost 5 years ago will never make it passed $3.50 today, because the shares are literally split in half since the merger of teh 2 satellite radio providers.

  This means anything higher than a 1:5 ratio will kill long term investors. Who you ask is one of those long term investors? Mel Karmazine himself, thats why we haven't seen an R/S yet.

  Institutionally speaking an R/S doesn't necessarily have to happen. The company is valued on a fair basis of total number of shares to company equity and it is growing in loine with that. Institutions look at that and don't necessarilly have to invest at the $5.00 mark.

• Report this Comment On April 09, 2010, at 3:03 PM, starpark88 wrote:

  the stupidity of some posters amazes me. Nothing fundamentally changes with a r/s, cash or value ise. True, historically RS's are bad and I don't approve of it here as I feel it will lead to panic or a bad perception of siri.

• Report this Comment On April 09, 2010, at 3:31 PM, jrbatista wrote:

  Perhaps confusion over what a reverse-split really entails is the greatest argument against it. There will undoubtedly be "investors" who will overreact to a reverse-split out of ignorace, potentially negatively affecting the stock.

• Report this Comment On April 09, 2010, at 5:07 PM, draland wrote:

  Rick, without you 'espousing' euphemisms about how 'passionate' a group we SIRIXM investor's are, while at the same time 'condemning' us for investing with our 'hearts', I think the message is clear.

  We investors (RETAIL)/subscribers SAY NO to an R/S...............it is clear to most of us already, that on a DAILY basis, the investment wholesalers, institutions, and hedge fund marauders make MUCH $$$ off of our COLLECTIVE MILLIONS, but to do an R/S will decimate the INDIVIDUAL small investor, while enriching their already monumentous cache of stock, which we all know is WORTH a whole lot right now !!

  STOP THE ZERO-SUM-GAME.............thought U was on 'OUR SIDE'............sangano...............

• Report this Comment On April 09, 2010, at 5:52 PM, ByrneShill wrote:

  It seems like nobody except starpark88 understand what a reverse split is. Lemme make it simple:

  IT DOESN'T DILUTE YOUR HOLDING!!!!!

  You'll end up owning the same percentage after the split. Yes, it's a zero-sum game, so it doesn't give you anything, but it's a regulatory thing. Yes, it's dumb to delist a company based on its stock price (unless it is <1¢), it should be based on market cap (which would immediatly prevent SIRI from being delisted), but the NASD is what it is, and SIRI can't afford to be delisted. So just file the (useless, I admit) paperwork already and move on with the program.

  "If I have 10 one dollar bills and get one 10 dollar bill in exchange how did that give me more money? "

  -How does that gives you less money?

  " You do however end up with less shares."

  -Which are worth more.

  I could go on and on, but I'll just say that this time Rick has got it right. It doesn't happen often (check his cap profile for proof), so when it does, better congratulate him.

  Congrats Rick.

• Report this Comment On April 09, 2010, at 6:11 PM, draland wrote:

  NO R/S Pop's...............thats my Call

• Report this Comment On April 09, 2010, at 6:16 PM, draland wrote:

  All seems 'good' until all of a sudden, U have 'less shares' that are WORTH LESS !!

  Duh , doesn't work !!

• Report this Comment On April 09, 2010, at 6:59 PM, Pumafive wrote:

  Aristotole, Don't you think Mel would have done the r/s from day one if no negative impact/impression on the stock would follow. Of course a r/s does not dilute share price, but it shows desperation on the part of management. Mel believes he can grow the stock value on it's own merits. It might take some time to prove to big investors, but he's getting it done. What's the rush. Let Mel work. If you truly care about the company then why do you try to put pressure on it. Many investors believe in Mel and management and that's why they're willing to take a little risk on this position. Mel has a history of success. This is why he's the CEO and you're not. Take a breather buddy.

• Report this Comment On April 09, 2010, at 7:43 PM, dstnewman wrote:

  Rick,

  Nice article. The comments just go on to show you that even smart people can be ignorant.

  However, I do not think that this is the right time for Sirius XM to do a reverse split. As you say, NASDAQ will never delist Sirius, so why push it now when the bashers can turn around and make it look negative?

  The best thing for Sirius can do right now is to allow the stock price to grow organically. I have said on my own website that I thought that Sirius would be back in compliance by the end of May. I strongly believe this is the truth. I don't think there is a reason to do a RS at this time.

  Once the stock is back in compliance and there is no immediate threats to the stock, the company can look at the RS as a move to strengthen the company, but not before. They had the opportunity before the Q4 CC. They decided against it and took the delisting letter. They might as well use the time given to them.

  Regards,

  David "Newman" Phillips

  newman@satwaves.com

  www.satwaves.com

• Report this Comment On April 09, 2010, at 8:23 PM, Pantaloon007 wrote:

  I am in the "former" camp. Why do any r/s unless forced to? NASDAQ will not delist, they love the volume. Whatever hard delist date is set will be well after SIRI has climbed above a $1 level, due to increasing car sales, subs, and balance sheet. If you think they need to r/s, you should sell now, because you're betting on failure. Really, as RAM stated, it is all ado about nothing (or bluffing) to each other, so no one loses face. So everyone cool their jets. I dont think both arguments are weak- they both are strong IF their scenario becomes situation. So sit back and enjoy the ride. Hell, you've been doing it since the single digit days, right??

• Report this Comment On April 09, 2010, at 11:51 PM, joesly8 wrote:

  I would just like to say, I hate the title of your article because it shows how stupid you are regardless of the valuation. Everyone knows a stock can move %5 easier when it's $0.80 than when it's $50 but apparently you don't so weather you’re a new investor or old one. You should just be fired and quit writing articles with dumb titles that get foolish people to think something they shouldn't...

• Report this Comment On April 10, 2010, at 12:17 AM, awnewhouse wrote:

  Look, Rick it is quite simple, historically an rs is not good for the sp at least in the short term. It is viewed as a failure of management to raise the sp organically. The shorts quickly short the price back down to pre split levels...those are the facts. The only time an rs is good is during a period of strength where the company has shown consistent earnings growth. In the case of SXM, it has a great future but Q4 of 2009 was the first Q to show profit and barely at that. Perhaps, after a full year of profit an rs may be helpful if the pps hasn't already risen to reflect the real value...something I fully expect to happen in the case of SXM.

• Report this Comment On April 10, 2010, at 9:29 AM, HumanzRthaVirus wrote:

  Wow, Starpark88 nailed my thoughts exactly upon reading many of these poorly worded, misspelling filled responses.

  I'm long SIRI and hold around 1,000 shares. I'd be happy if those shares hit $10. Realistically, that ain't gonna happen for a long time but it is possible long term. If a reverse split of 10 for 1 took place, the fundamentals for the stock going from $10 to $100 would still be the same, those being earnings, paying off debt, growing the subscriber base etc etc etc. The benefits from a reverse split would be the potential institution interest, more professional investor interest because of the price being over $5 and the float being substantially lower meaning that earnings per share will be higher when the profits (optimism!) from coming quarters are divided by the reduced share base. Positive results like those will only drive the stock price HIGHER. Shorts, if more come to the table initially, will HAVE TO BUY to cover their positions so long as SIRI keeps moving in the right direction.

  I get the feeling that many of the responders to this article are those who think that SIRI, at its current float levels, could become a $100 stock and will make them rich beyond their dreams so that they don't have to work another day in their lives and can swill all the beer possible and watch Springer all day long every day.

  Here's a great example of why at current levels that will not happen. Check out AAPL, that's right, Apple. AAPL is a PROFITABLE company with a diluted EPS of 10 DOLLARS per share, doing approximately $46 billion in revenue per year, yet their float is less than 1 billion shares outstanding and the stock currently trades around $240. Currently SIRI has a diluted EPS of -$.148 per share (that's a loss folks), does around $2.5 billion yearly revenue but has almost FOUR times as many shares outstanding at close to $3.8 BILLION than AAPL does. That's why SIRI stock trades for what it does today people, so stop drinking the "get rich quick" koolaid and start telling all your friends and neighbors who don't have Sirius subscriptions to look into it, IF you actually are subscribers yourselves and KNOW the value presented by such.

  That being said I also seriously doubt that most Sirius investors only have subscriptions because they own the stock and would cancel said subscriptions if the company enacted the reverse split. In my opinion I'd say the opposite is actually true. Most subscribers either don't own the stock, or bought the stock AFTER becoming a paying subscriber and realizing how much value there is in the service. You have to have had Sirius and let it lapse to truly realize the difference between it and your iPod, terrestrial radio, or so called "free" streaming services that supposedly compete with Sirius. After a month or so without Sirius, I couldn't wait to get it back and now am a paid subscriber and will be whether the company reverse splits or not. I know I'm not alone in this way of thinking.

• Report this Comment On April 10, 2010, at 5:58 PM, PeteC888 wrote:

  In most people's minds, siri is about a $1 to $9 stock. If you split it to $20, because of psychology, it could easily fall back down to a range of $1 to $9. Also, with some good news, siri could easily go from $1 to $2, but it would be much harder for people psychologically to bid it up from $20 to $40 in the near term.

• Report this Comment On April 10, 2010, at 6:08 PM, PeteC888 wrote:

  Some people buy a $1 stock like siri, not because they think it is worth $2, but because they think some people will think it is worth $2.

• Report this Comment On April 10, 2010, at 6:13 PM, SUPERMANSTOCKS wrote:

  A reverse split would make sense at this point. Also SNS is now traded under WEST on the pink sheets.

• Report this Comment On April 10, 2010, at 8:19 PM, HumanzRthaVirus wrote:

  SNS trades on the NYSE under the new (as of Friday) ticker BH which stands for "Biglari Holdings" as Steak N Shake is now known on the market. The stock closed Friday at $407 dollars.

• Report this Comment On April 10, 2010, at 9:08 PM, Angelmos wrote:

  "A reverse split is a touchy subject in the Sirius XM camp, with vocal opinions on both sides."

  Sirius XM Camp just needs another press release before their hearing to announce an addition of at least 250K subscribers during the Q1-2010. Mos automobile experts estimate the SAAR rate during the Q1-2010 was above the SAAR rate during the Q4-2009 when Sirius XM added 257K subscribers.

  Sirius XM share price has surged 50% since the press release in January announcing the addition of 257K subscribers in the Q4-2009.

• Report this Comment On April 10, 2010, at 9:59 PM, geoslv wrote:

  We used to say there's only one way for this stock to go and that''s up. That was at 20c. It's different now. Now it's the usual grind and effort. I do not have confidence that it will keep multiplying. So I agree with Rick.

  But these writings always ignore questions about manipulation.

  Some say it's harder for a stock to go from 10 to 20 than 1 to 2. Is there historical evidence of this? At one time Apple went from 20 to 22. Now it goes from 200 to 220. Am I wrong?

• Report this Comment On April 10, 2010, at 10:05 PM, geoslv wrote:

  We used to say there's only one way for this stock to go and that''s up. That was at 20c. It's different now. Now it's the usual grind and effort. I do not have confidence that it will keep multiplying. So I agree with Rick.

  But these writings always ignore questions about manipulation.

  Some say it's harder for a stock to go from 10 to 20 than 1 to 2. Is there historical evidence of this? At one time Apple went from 20 to 22. Now it goes from 200 to 220. Am I wrong?

• Report this Comment On April 11, 2010, at 11:08 AM, kemo62 wrote:

  joesly8 wrote: I would just like to say, I hate the title of your article because it shows how stupid you are regardless of the valuation. Everyone knows a stock can move %5 easier when it's $0.80 than when it's $50 but apparently you don't so weather you’re a new investor or old one. You should just be fired and quit writing articles with dumb titles that get foolish people to think something they shouldn't...

  Joesly got it right stock,stated simply and understanable.

  I can only add that an 80Ct stock can experience expotential growth of a douuble, triple,or a ten bagger whereas a $ is 50.00is not likely to do the same. Siri went from .05 to 1.15 in a yearI think seri can much higher from here organically,based on the synergyies of the merger and increasing sales.

• Report this Comment On April 11, 2010, at 7:38 PM, PeteC888 wrote:

  In response to geoslv mentioning that Apple used to go from $20 to $22, and that now Apple can just as easily go from $200 to 220. So why can't Sirius go from $1 to $2 just as easily as Sirius could go from $20 to $40 after a reverse split? My response is: Apple is different than siri, because Apple is trading more from fundamentals. Sirius is a more speculative stock, so I think that psychology plays a much bigger part in the price of Sirius. That is why I think it would be a big mistake for Sirius to go through a reverse split.

• Report this Comment On April 14, 2010, at 2:08 PM, Drakon1976 wrote:

  THE SHORTS ARE ABOUT TO GET CRUSHED ON SIRIUS!!!!!!!!!!!!!

• Report this Comment On April 14, 2010, at 2:08 PM, Drakon1976 wrote:

  THE SHORTS ARE ABOUT TO GET CRUSHED ON SIRIUS!!!!!!!!!!!!!

  THE SHORTS ARE ABOUT TO GET CRUSHED ON SIRIUS!!!!!!!!!!!!!

  THE SHORTS ARE ABOUT TO GET CRUSHED ON SIRIUS!!!!!!!!!!!!!

• Report this Comment On April 16, 2010, at 11:45 AM, sirrobocop wrote:

  You are correct about stigmna attached to reverse splits for companies on their way down the toilet desperately trying to look viable as opposed to being viable. Yes, it could open things up for shorts. Everyone missed that fewer shares tends to increase volatility, an item that makes a stock more appealing for day traders.

  Others in these comments point to historical precedent as their argument against a reverse split. Comparing the number of shares a company has on the market to other companies isn't relevant either, because it's primarily internal factors that determine accurate share value (leaving hype marketing out for the moment).

  One should - instead - try to determine what other factors in play might indictate a reverse split, for there are cases where a reverse split may be somewhat logical.

  Share value is primarily a reflection of how much pie is leftover when a company produces income with its assets to pay its bills (debt). The more pie leftover, the more valuable each share becomes. Thus, to increase share value, you must (1) increase your pie using the same assets, or (2) decrease your debts substantially using the income from your assets, or (3) decrease the number of people dividing up the leftover pie, or (4) be really good at bubble-hype marketing.

  Although the subscriber base is clearly increasing, note it did not increase rapidly enough to support competitor XM. Buying out XM to save the subscribers and increase market penetration may (or may not) have been a good idea, but the shares came with it - substantially increasing the number of investors dividing the leftover pie. Logic dictates removing some of these shares is in order, to remove the "weight" around the neck of the share price.

  My feeling is just a 1 for 10 reverse split, nothing bigger - and it's important to note shareholders have AUTHORIZED a reverse split; clearly they see the logic to some degee. I do not think it would be wise for SIRI to over-inflate the share price artificially with a large reverse, either. A dramatic change would also represent a dramatic shift in the type of investor involved (more institutional than individual). My point is that small investors deserve a chance to ride SIRI's rally wagon, if it comes, for absorbing SIRI's risks through this dark economic period.

• Report this Comment On April 16, 2010, at 3:20 PM, DJDynamicNC wrote:

  It would be disappointing. I am holding on to Sirius in the anticipation of decades long, gradual growth, potentially followed by dividends which I don't expect to see for a long, long time. "Getting in on the ground floor," if you will. Having a tenth as many shares is not an ideal situation for me in terms of dividend bearing.

  Also, if shares jump to 10 dollars now, I think it's unlikely that they'll then climb to 100 (whereas going from from 1 to 10 seems quite reasonable). Posible, I suppose, but we must never forget that the market is not exactly rational, and perception is a big part of it.

  My conclusion is that it would not be terrible, but it's not my preference.

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