Get Sirius About a Split

The debate among investors about the fate of Sirius XM Radio (Nasdaq: SIRI  ) is one of the most fascinating exchanges today. And frankly, the turnaround at this company over the past five years is as good as that at any business in America today. Mel Karmazin and his executive team have done a simply brilliant job of securing financing and stabilizing this business. Given where the company was in its darkest hours, it's nothing short of a miracle that Sirius XM is now positioned for sustainable cash flow growth.

And so, it is now time for the leadership team to get serious about a reverse stock split. Shareholders have approved it. And when you are competing with the likes of Apple and Google, it's not a good idea to ever have your Nasdaq listing in question. Sirius needs to get serious about a reverse split, and should execute it now. Perception isn't the whole of reality, but it definitely counts. And there's no doubt in my mind that this business is not a penny stock enterprise. It's time to take the cue from AT&T and reverse split the stock.

Fool co-founder Tom Gardner does not own shares of any companies mentioned. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Google. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (26) | Recommend This Article (27)

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 July 23, 2010, at 9:42 AM, vesprito wrote:

    SIRI DOES NOT NEED A SPLIT. SUBS ARE UP ,PAYING OFF DEBTS. AUTO COMPANIES ARE DOING BETTER. CASE IN POINT GM IS GOING TO BE ON THE STOCK MARKET AGAIN SOON. MEL IS TAKING THIS COMPANY TO OTHER MONEY MAKING AVENUES.

    THAT'S WHY MEL IS THE CEO NUT YOU.

    SIRI = MONEY.

  • Report this Comment On July 23, 2010, at 9:47 AM, themaxpain wrote:

    Was there any actual research in this "article"? I couldn't find any, but maybe somebody else can...

    I can write two paragraphs of mindless blabber, too. Oh hey, look, I just did!

  • Report this Comment On July 23, 2010, at 9:52 AM, Fredlee009 wrote:

    Who needs to cover Tom?

    Does MSFT need to R/S?

    What about XOM?

    C?

    Tons of stocks with more shares outstanding.

    Stock baggering this one. Stockholders only voted for a R/S, and let me make this perfectly clear and easy for you....

    TO AVOID DELISTING. They have done that now.

    No need to r/s. Company doesnt want one. Liberty doesnt want one right now. And stockholders right now dont want one.

    The only people who want one are writing of your "financial" website, and believe me, I use that term very loosely. Only idiots want a r/s. Basically.

  • Report this Comment On July 23, 2010, at 9:54 AM, Fredlee009 wrote:

    Sorry I meant stop baggering...

    And writers of your... not writing...

  • Report this Comment On July 23, 2010, at 9:55 AM, Fredlee009 wrote:

    Hey Tom, havent you been questioned by the SEC regarding one of your employees on this stocks coverage. does this now mean no one but you wants to bash the company? Your writers scared stockholders are sick of your misinformation and fearmongering about this company, and completely agenda driven bias against this stock.

  • Report this Comment On July 23, 2010, at 10:17 AM, ouruaw wrote:

    siri is doing just fine no to a split

  • Report this Comment On July 23, 2010, at 10:18 AM, ouruaw wrote:

    Sirs has been said be a monopoly in satellite radio true

    Siri pays music royalties true

    Siri competitors pay no music royalty true

    Siri. Competitors will be made to pay music royalties true

    Siri competitors say they cannot afford to pay royalties true

    Siri has the best line up than any of her competitors true

    Grandpa said you get what you pay for LONG SIRI TRUE

  • Report this Comment On July 23, 2010, at 10:54 AM, vette24 wrote:

    no split!!!! hedge funds and shorts are the

    problem. stock should be $1.50 a share going

    to $2.00 after aug report.

  • Report this Comment On July 23, 2010, at 2:29 PM, TMFTomGardner wrote:

    Fredlee09, that would be news to me. Can you give a specific reference to any regulatory inquiry? I have no knowledge of any such thing. Remember that we run a completely open and transparent site. We have disclosures guidelines and we are open to exchanges with our members directly every day of the week.

    My suspicion is that you won't respond to this note, but I hope you will. Otherwise, I'll just assume you felt like going for a smear rather than a clear, positive, pro-social exchange of ideas.

    Lastly, I'm not quite sure why you think this article could be perceived as a smal on Sirius. I encourage you to re-read it. I am very praising of the company for its incredible turnaround. Have you ever watched the Karamazin interview on Charlie Rose? There was no guarantee that the turnaround would work. This was a company in very very desperate straights at one point. I praise Karmazin and team.

    The reverse split request is really to help the company get more of the respect it deserves. Whether it should be this way or not, people see a $1 stock and think "that company must be going under". Put the stock at $10/share, and I think more people will focus on the real story and the long term prospects for the firm.

    Best of luck to you with your investments and please get back to me on the item above.

    Foolish best,

    Tom Gardner

  • Report this Comment On July 23, 2010, at 3:23 PM, paulbverizonnet8 wrote:

    Dear Tom Gardner

    Thank you for the informative piece here at the fool web site. I respectfully disagree about having a reverse stock split, because I think that since the financials are supposedly looking good, then the stock price should move gently upwards of it's own accord. Be patient, I think we're on an upswing, although I know this is all speculation, but isn't that what stock investment is, Speculation?

    I just hate to lose my numbers of shares, because as a small time investor, I need every bit of growth and earnings per share that I can get. If the stocks split, and I have one half, or one tenth as many stocks in my portfolio, then a one dollar per share growth in the value of the stocks isn't as big a deal as if they are worth one dollar and then go up to two dollars. Please don't ask SIRI to split, just ask the insiders to start buying their stock. That will do more for the company than a reverse stock split.

    Oh, and don't forget, if no one is saying bad things about you, that means you're sitting on your rear and not doing much.

    Sincerely: Giordano Bruno

  • Report this Comment On July 23, 2010, at 3:32 PM, tootun wrote:

    MF why do you always use this Passive Aggressive approach when you stalk SIRI daily? Are you guys all shorting this company? It's such a waste. Tom you have nothing in this article but an opinion. Do they really pay you for this rubbish? Good lord you guys are really something to watch!

  • Report this Comment On July 23, 2010, at 4:04 PM, southernbeachguy wrote:

    Tom, Mel told us in April that there would be no R/S. Sirus is in no jeopardy of being delisted and their profits & revenue are going up. Us shareholder DO NOT WANT A R/S, only Shorts, and it seems you, want one. Drop the subject, as you can see by the response, no one wants one.

  • Report this Comment On July 23, 2010, at 7:13 PM, georgetag wrote:

    I may not be very smart, but I just don't see the negativity in T.G. article.

  • Report this Comment On July 23, 2010, at 10:09 PM, WoodyDog1400 wrote:

    R/S has been due for a long time. Must be done with positive momentum. Otherwise, get used to $1 rest of year.

  • Report this Comment On July 24, 2010, at 11:56 AM, Fredlee009 wrote:

    I actually will respond to this note. Rumors are rumors, they dont have to be true. Regardless of whether they did or not, they should be. While your at it, I personally believe the SEC should be investigating your whole site and all your authors. Sorry Tom. Too many "mistakes" and 7 article days on Sirius where the takes are all negative, all biased toward dislike, always uses misleading information, and generally incompetent coverage, if not borderline suspect. So when I did hear this rumor, it didnt surprise me.

  • Report this Comment On July 24, 2010, at 11:58 AM, Fredlee009 wrote:

    .I could pull probably, its my guess, over 100 factually wrong articles written about sirius, that contain either 1 error or more in them. Im not talking opinion Tom, Im talking just wrong information. Period.

  • Report this Comment On July 24, 2010, at 12:07 PM, Fredlee009 wrote:

    Yes Of course I watched that interview. There is no factual evidence Tom, to support a view that the business model isnt working or cant work the future. All I hear is there will be another technology to whipe them out. This will whipe them out. Well smart guys. Its not, its hasnt and its not likely too. What you fail to grasp in your infantile grasp of this company is that the product for all your thoughts and efforts and worries is GAINING strength and users during THE WORST ECONOMIC DOWNTURN IN HISTORY. Rising revenue, DROPPING COSTS, improved churn, higher take rate, and improving respect to the common should have institutions drooling. Their ability to repay their debt is already here sub wise, they just need their price increase in August 2011, like we know they are, and they will be able to use cash to remove all debt by 2015. Now,whats a safer bet. Their metrics continue, auto sales rebound to the levels J D Power and Edmunds say they will, Sirius holds similar or better ARPU and SAC /churn, and they continue to use cash to remove debt, and make responsible common stock decisions, or a new technology comes along and erodes their base in the next 5 years. And its not Pandora. Its not HD radio, and its definitely not terrestrial radio. So if internet radio can in 5 years solve impossible to solve problems, gather over 500 million dollars in money to add better content than sirius, im not worried. considering 30 million of their total 50 million in revenue went to the music industry, im not sweating.

    Basically Tom, A R/S only helps future stockholders, why CURRENT stockholders NEVER WANT ONE.

    R/S only offers more downside. Money is all that matters, not share count. If someone wants to spend 100 milliion dollars buying into Sirius, they arent going to go, u know what, their share count is too high. They are gonig to do it based on numbers, profit potential, and upside potential(r/s removes tons of upside potential.

  • Report this Comment On July 25, 2010, at 5:38 AM, paulbverizonnet8 wrote:

    Don't forget that SIRI is providing weather information to yachts and ships. I hope they start providing navigational maps and other information also.

    Giordano (Sure hope the insiders start buying.) Bruno.

  • Report this Comment On July 26, 2010, at 4:46 AM, rookie2009 wrote:

    That last comment was mean. I still don't know what to do with my free 1000 shares.

  • Report this Comment On July 27, 2010, at 10:30 AM, ByrneShill wrote:

    I think those siri receivers must have a brainwashing functions or something. Everytime anyone mentions a reverse split (a technically non-event), these haters come out of their hole and start speweing hate and wishing cancers onto others.

    Not only do you people (fredlee, vette, vesprito, llw...), display complete ignorance of the inner working of the stock market, but your lack of basic politeness makes you sound like pre-teens who've been raised by a tv set stuck on fox news.

  • Report this Comment On July 27, 2010, at 12:24 PM, kmacattack wrote:

    Byrne, I agree with your statement about the hateful comments, and they are typical of the crowd led by the FUX the "news" network. I do however disagree with your analasys that a reverse split would make no difference to SIRI stockholders. If the manipulation can be controlled, there is no reason this stock sholdn't double in a very short time period. My broker, who is a "chart" guy wasn't thrilled when I bought my first 5,000, then another 5,000, and once more 5,000 shares, all on increases of about a dime. This is one of the all time best turnarounds a company has ever done, with outstanding management. I believe, as most others do, that it will be much easier for SIRI to double, triple, or even quadruple within a year with a starting price of $1.00, rather than $10. Buying SIRI was somewhat of a gamble for me. I'm not a trader. I'm looking at this as a "buy and hold" company which has great potential to make a lot of money for me and millions of others. I believe the bashers on the SIRI board are generally day traders who are trying to manipulate the stock downward on a regular basis, so they can pick up massive amounts of shares on margin, and dump them every few days when they "allow" the stock price to rise. A bunch of them need to be in prison. When the "socialist" (according to the FUX with the "news" bunch) administratin puts a stop to these crooks, a lot of investment capital will return to the market, because people will once again know that the government is on the side of the PEOPLE and isn't going to allow the LAISSEZ-FAIRE free for all MONOPOLY game to go on unpunished. There is a big difference in the concept of FREEDOM and the conceptual beliefs of a SOCIOPATH, but, unfortunately, there are way too many "It's all about ME and my FREEDOM to do whatever I feel like" people out there. At least the guy who wished cancer on people wasn't talking about buying guns and ammo and shooting people. Maybe he will realize how he sounds, and apologize for over-reacting. I understand his frustration and anger, I just think his reaction was way out of bounds.

  • Report this Comment On July 28, 2010, at 5:20 PM, ByrneShill wrote:

    " believe, as most others do, that it will be much easier for SIRI to double, triple, or even quadruple within a year with a starting price of $1.00, rather than $10."

    If you believe that you are wrong. Seriously, if youy believe that, you have no buisness being anywhere near a stock market. The thing that needs to double, triple or quadruple to make you make money is the market cap, which doesn't change during a (reverse) split.

    Also, Before you even talk about the effect of manipulation of a stock, you need to prove that such manipulation exists. Not only do I not believe that "the shorts are manipulating the makrets" like the average conspiracy theorists keep saying (without ever bringing a single proof forward), but I also believe that if such manipulation existed, it would have the exact same relative effect before or after a reverse split.

    So not only is you point delusionnal, it would be moot even if it was real.

  • Report this Comment On July 30, 2010, at 11:57 AM, mountain8 wrote:

    Gee, war of the words.

    I also don't see any negative comments. I would love to see the first paragraph in the annual report. The comments seem to be about the past when there were real problems. And TMF pointed 'em out. The problems seem to be easing.

    The R/S doesn't effect anything in the financials except everthing per share. What I understand is that many industrial investors stay away from penny stocks. Some are restricted to purchasing stocks that are $5 or above. A reverse to $10 share should add buyers to the market, i.e. mutual funds et. al. More buyers, more action.

    I would love to own a bazillion shares but nothing wrong in owning 1/10 th of a bazillion at 10x the price.

  • Report this Comment On July 30, 2010, at 2:51 PM, greedwhenfearful wrote:

    Warren Buffet says splits don't matter. So, why would reverse splits matter?

    Anyone that does their research, like Tom, knows this is true.

    However, for the uneducated a reverse split would make this company look safer, it's no longer a penny stock! It would also allow the big money to invest in it since they aren't allowed to invest in penny stocks. Because of these reasons, the stock price would go up because there would be more buyers. I'm with Tom, do a reverse split!

  • Report this Comment On July 30, 2010, at 8:23 PM, jfrankh57 wrote:

    I own another stock in the energy arena that recently went for a vote to reverse split which I nixedin my proxies, but the crowd I was in lost that vote...the reverse split was approved and within a month, the stock reversed...it was relatively stable at just over a buck a share. The split led to nothing initially, but currently, the company has lost about 30% of its value. It isn't a biggy for most folks, but for the little guy it DOESN'T help. Don't even mention the, now small float that allows managment to pony up stock incentives. This stock does have a substantial debt load, but it has ok cash flow.Once this stock does recover, I fully expect management to feather its nest way before the common investor earns any bonuses that are "inherent" from a smaller float. I would much rather see free cash being used to retire debt and withdraw some of the float by stock buy backs. Then you can talk to me about reverse stock splits IF I CAN TRUST MANAGEMENT. NOTE: We have all seen just how badly these boys behave when they have their hands in the cookie jar and no one is looking. Had I not been invested and thought that somethings will come my way eventually, I would just drop out and buy me some land to grow commodities on...

  • Report this Comment On August 02, 2010, at 6:14 AM, kemo62 wrote:

    Tom gardner said in his july 23 2010 article on siri reverse stock split----". It's time to take the cue from AT&T and reverse split the stock."

    Well mr Gardner I checked out ATT symbol "T" and theirr common stock was never reverse split. "T" had a forward split of 2/1 on March 20,1998.

    My source for this information is Yahoo financial page on "T" interactive chart and page on "T" KEY statistics.

Add your comment.

DocumentId: 1243999, ~/Articles/ArticleHandler.aspx, 7/23/2014 8:00:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement