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Sirius Retail Sales Questions Left Unanswered

by: Brandon Matthews August 22, 2008 | about stocks: SIRI    

Brandon Matthews

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As we discussed Thursday night on our weekly SiriusBuzz radio show, my trip to Best Buy (BBY), Circuit City (CC) and Radio Shack (RSH) did little to answer any questions as to what the future may hold for Sirius XM (SIRI) in Q4.

I had decided a week ago to begin weekly trips to the retailers to see if any new retail promotions might be in the works. When Jessica Reif Cohen of Merrill Lynch asked Mel Karmazin for a preview into retail, Mel answered that the company wanted to talk to the retailers before talking to Wall Street. What is a Sirius XM investor to do?

Well we do what we did years ago! We visit the stores, talk to the sales people and look at the inventories of product. We inquire about sales and marketing plans the reps may have divulged. Anything to feed our insatiable curiosities.

My trip began at Circuit City, where I found most Sirius XM products marked “clearance.” Sportster 5 home docking stations were sold out at the clearance price of $8.88. Stiletto 2 accessories were marked down as well, with display products being offered for sale. I just had to ask a salesman what the deal was! A nice young man began to explain to me that the companies were going to be merging soon. Not a good start.

I asked him what the point would be of buying a Sportster 5 model if I could no longer purchase the accessories for it. He replied that they were going to be replacing all of these older radio models with new ones before Christmas, and suggested that I just wait for the new radios to come out. Hmmm.

So off to Best Buy I went. Best Buy is operating as if there was no merger. I was very happy to see a large Sirius banner hung from the rafters. Best Buy had a full stock of radios and accessories, and the salesman there was much better trained and focused on attempting to sell me the products that were in stock based on my personal preferences. The only radio that was missing from the display was the Stiletto 100, the original and nearly outdated portable, so all is forgiven. Also of interest was that Best Buy had a display, literature and everything required to purchase and install Sirius Backseat TV. He claimed to have no knowledge of any new radios coming in the future. I could not figure out if he was stating this out of a lack of knowledge, or a preference to make a sale in that moment. Which meant of course that I now needed more information.

So off to Radio Shack I went. My experience with Radio Shack is that they are always more than willing to help answer any question I may have and go to any lengths to get the right answer. Unfortunately that would not be the case this day, as I was met with a completely unknowledgable salesperson who said to me “I don’t know anything about it. Those are the radios we have and they’ve been there for “like” 3 months.” He then walked away as if he had no interest in working that day. Directly over the Sirius display, was a rebate offer that is running from August 8 to August 28 that again he left for me to figure out on my own.

I will continue my weekly trips and my weekly reports and invite anyone else to report their own findings in this thread at the SiriusBuzz forums.

Position: Long SIRI

No positions in BBY, RSH or CC, although I have held CC shares in the past.

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This article has 32 comments:

  •  
    Aug 22 02:46 AM
    Well that's informative...duh........ post such a blah blog......what are you trying to accomplish by this......WHAT?.....Tr... going to college and doing something else with your life if your going to put out this crap...not really worth replying to except it just pissed me off that you waised my time.
    Reply
  •  
    Aug 22 03:55 AM
    Whatever the results/findings, this kind of on the ground info is useful. Ignore the moron who doesn't get the importance of following this kind of info.
    Reply
  •  
    Aug 22 06:59 AM
    Hi,

    As a loyal Sirius subscriber and shareholder, you asked me to write back if I had any thoughts, and I have a BIG ONE.


    The complete lack of promotion by Sirius of the NFL.

    I understand that Mel is still working out some details before airing a commercial about the merger…but the fact that for the last 3 years there has been ZERO exposure in retail stores or on TV about the NFL being on Sirius…is an OUTRAGE.

    Remember those XM commercials for Baseball? I don’t even watch Baseball, but I can’t get Big Poppy’s voice out of my friggin head…”EBREY TEAM EBREY GAME!”

    Now THAT is brand recognition. Sirius, pardon the pun has DROPPED THE BALL in regards to the NFL.

    Where are the displays in Best Buy? Where are the ads on TV? The football season is about to start, and NOTHING. They could have nabbed Brett Favre for a funny commercial about switching teams. With Brett saying XM listeners don’t have to switch teams to listen to the NFL now.

    Or what about the newly acquired MAD DOG doing a commercial about the NFL??? Then you’d kill TWO birds with one stone, promoting the NFL AND the MAD DOG show.

    WHATEVER…the point is…I have enormous faith in the future of Sirius. But it’s things like this that drive me nuts. Don’t the shareholders have ENOUGH stress coming in the forms of shorts, bashers, Cramer and Goldman Sachs….without having stress coming from inhouse?

    Lets go Mel! I know you said after Labor Day…but there are still some things that could be done NOW.

    Still long and strong. Just frustrated.
    Reply
  •  
    Aug 22 07:14 AM
    Killing merger process, GS, Cramer, Shorts, Auto Sales, Debts, bad economy, no proper marketing.

    Still subscribers base is growing.

    Just think going forward when eveything will be normal and taken care.
    And certainly integration with iPhone etc. etc.
    Reply
  •  
    Aug 22 08:42 AM
    Did you really expect a bunch of zit-faced 16-year-old employees of Best Buy, Radio Shack, and Circuit City to provide you the details of Sirius XM's retail marketing plan?

    Mel and the other execs aren't still sitting around drinking martinis to celebrate their successful merger...we'll hear soon enough.
    Reply
  •  
    Aug 22 08:43 AM
    What happened to the old Mel Karmazin??? This was a bright guy who never missed a trick & Always made his shareholders money. The lack of information about the SIRIUS XM merger as it relates to the retail sector is like moving the company but forgetting to leave a forwarding address or new telephone number. Mel your really pissing me off as my investment dwindles. Thanks for the store hopping maybe Mel will read this article & send some info to the retail sector so these ding bats can answer a customer question will a bare minimum of intelligence.
    Reply
  •  
    Aug 22 08:47 AM
    Give Mel time to work his magic. I am wondering if interoperable radios have been in the works prior to the merger. WHAT A BOMBSHELL ANNOUNCEMENT THAT WOULD BE FOR Q4.
    Reply
  •  
    Aug 22 08:51 AM
    thanks frigginreggan now big popi's voice is gonna b stuck in my head the rest of the day
    Reply
  •  
    Aug 22 09:14 AM
    Its amazing to me that it seems like the shareholders care more about the company than the employees do. Love the idea of farve doing a siriusxm commercial to promote sirius nfl. Hope some marketing agents read this board.
    Reply
  •  
    Aug 22 09:16 AM

    Mel is a smart CEO he knows exactly what he is doing, first he will take care all the shorts, remember his latest interview ? Shorts will suffer big losses along the way, show will start after Labor day

    Short Interest (Shares Short) 310,672,200
    Short Percent of Float 22.35 %
    Short Interest - Prior 159,958,300

    A whole array of promotion is in the works IMO. Be patient, At this price I keep on loading, this price its a steal.
    Reply
  •  
    Aug 22 09:18 AM
    If post merger contingency plans are not already in the works then we(shareholders) are in trouble. I think valuestocksonly has it right. Big plans around the bend and the real Mel will shine. Subscribers are coming in and churn is down, balance sheet just got a boost, along with the credit rating. Mel did the best with choices that were presented to him......It was ugly though and financed by the shareholders.
    Far Away has a great point in his post.....all things considered..SIRI is still standing. They have taken punches from everywhere!
    The marketing will come, be patient.
    Long SIRI, Long Steelers
    Reply
  •  
    Aug 22 09:33 AM
    ARI D K , I agree with you and hope your right about the show starting after Labor Day. The short interest with a Float of around 3.1 Billion shares is more lice 11 % than 22.35%. We are definitely under attack but we haven't been overrun yet. LOL.
    Reply
  •  
    Aug 22 09:35 AM
    correction... although I may feel "shorts" are like lice I meant to type LIKE
    Reply
  •  
    Aug 22 09:39 AM
    Brandon, The Retail supply chain is now and has been in the past, Broken. Part time sales people haven't got a clue as to what's going on with Satellite Radio. This is not new, but it definitely needs to be fixed. This is a complicated technology that has been left to the do-it--yourself retailers to figure out. I'm not sure what the answer is but the current model is a Huge Barrier to entry for new retail subscribers and should be tackled as that type of problem by management if they ever want to become mainstream. Look at Apple's retail model as an example.
    Reply
  •  
    Aug 22 09:54 AM
    no wonder why Circuit City is going out of business
    Reply
  •  
    Aug 22 10:17 AM
    Sirius needs to overhaul its retail approach if they want to improve results. For example, I would like to see a Sirius representative at some of the Best Buy stores. Obviuosly itis impractical to have someone at every store but I believe that they could put someone at say 25 of the highest volune stores. Alternatively, they could produce a short video presentation for distribution to all of the stores which details the new offerings. The video could also be available for internet distribution. I do not want to rely on Best Buy, Circuit City or any other store personnel who have no vested interest in the success of Sirius to be in charge of the company's future retail success. I am a strong believer in Sirius and have been long Sirius since 2004. I also believe that Mel will deliver. However, it will take time and the stock will not move appreciably higher until the company produces significant results, e.g. breaking through 20 million subscribers, free cash flow, realization of synergies, etc.
    Reply
  •  
    Aug 22 10:42 AM
    I look at that all as good news! It's confirmation that new products will be out soon and that the old ones are also stil being aggressively marketed. Sounds all good to me.
    Reply
  •  
    Aug 22 10:44 AM
    I look at this as all good news! It's confirmation that new products will be out soon and at the same time current products are also still being aggressively marketed. Sounds all good to me!
    Reply
  •  
    Aug 22 12:29 PM
    I think more than anything this shows that the OEM channel sells itself and is quite easy to evaluate, but Satrad doesn't have a solid plan for retail yet, but when they do, I think thats when we'll see the big gains in subscriber growth... assuming its more than teh 18 year olds at BBY and CC being the whole plan. Even the Kiosks in the malls are manned by only marginally trained people on the equipment.
    Reply
  •  
    Aug 22 01:00 PM
    I posted on this subject yesterday.
    I also check the above named stores and was not pleased with the condition of the displays and lack of promotion regarding the merged companies and all the General (not detailed) information regarding things to come.
    Reply
  •  
    Aug 22 01:33 PM
    I was in Best Buy ib Warren, Ohio and asked the young salesperson about what type of offerings to expect due to the merger. He was pretty much clueless. I filled him in on some details but he was not at all up to speed(not good). I then went over & talked to the installation dept. manager and he reported that they were still doing a decent amount of new intalls on both Sirius & Xm. Actually he stated that was keeping them busy mory than any other type of car audio installations. So at least the consumer knows enough or doesn't care, they just want it know!
    Reply
  •  
    Aug 22 04:13 PM
    just got back from radio shack, salesperson was aware of the merger ,uninformed of any new product etc....he said the sub. is very high in this area, a moutain community with poor reception.
    just a thought, with the merge they could take some of the layoff's and rotate/disperse to different stores for training/sales. also if sirixm gave some sort of commission/incentieve to the salesperson, that might help.
    low volume day? any comments?
    Reply
  •  
    Aug 22 06:20 PM
    I believe the Christmas advertising blitz will start right after Labor Day.

    If not... then we've been had.
    Reply
  •  
    Aug 22 06:32 PM
    Todays trading was a stalemate due to major manipulation right before the guidance and the 27th Bond date decision. Expect a large increase in SP on Mon or Tues to be followed by one more plunge. After that, it will gap up to avoid the buy tiggers. That could come any day, probably while ur showering.
    Reply
  •  
    Aug 22 06:49 PM
    " THE HOUSE OF PAIN" LOL !
    Reply
  •  
    Aug 22 07:17 PM
    What part of "SALESperson"... is so mysterious to some of you ???
    Think Jobs, Gates, etc.
    Reply
  •  
    Aug 22 08:04 PM
    relmor, right on target
    Reply
  •  
    Aug 22 08:59 PM
    My daughter tried to buy a radio incl. installation in her 5 year old Audi.
    Wherever she went same story. " Glad to sell you a radio, but sorry we can't help you with the installation". One had the great idea of taking the new radio to Midas, they probably can do it.
    The sad part of the story is, she is not probably not alone. But the good part is, she still wants it and so do we, because now my husband wants one too.
    Reply
  •  
    Aug 22 10:28 PM
    Brandon,
    I picture you as James Bond, doing undercover work for us investors and appreciate your efforts. As for the comments about lack of media blitz; I'm sure it's coming. It takes weeks to put commercials and marketing plans together and Mel has his hands full with financials at this point. I'm not up on the staffing at SIRI but their marketing group must think differently now, rather than focusing on competition with XM, they now have to find ways to convince the masses to spend the 13 bucks for something they can't get for free.

    Off Topic:
    Mel hasn't forgotten us. My feeling is he was taken off guard and thought the bad debt deal to get the merger done would be swept under the rug and the investment community would move on after a short while. Now that he sees the tremendous negative impact of the deal he made, he is going elsewhere for a better deal and will provide the details around Labor day. The only question in my mind is this enough to finally get the fire started under SIRI.
    Reply
  •  
    Aug 23 01:25 AM
    Cash flow is to come--not soon but smart money says it will and watch the stock fly when it does! The balance sheet (debt) has been reported on in depth and no one except a naysaying, unqualified skeptic here or there has forecasted bankruptcy, which ain't happening to the undervalued M&A baby, which has to learn to crawl before it can walk and then run. While the stock got mauled because of the merger terms, the company will no doubt be able to pay its bills when they're due, maybe some of them early to create a catalyst effect. Recent news and annoucements are harbingers for the long side. The company is blessedly off the credit list. I haven't heard about even one star on the programming side running for the exits. On the contrary, the company keeps adding major talent (Mad Dog on the loose!). SIRI's R&D is an innovation muscle that is probably experiencing hypertrophy right now (anyone watching R&D spending?), and this will lead to manufacturing, marketing, and sales boosts--and, ultimately, to bigtime earnings surprises that are over the horizon. Okay so I am an optimist, but with good reason. I believe those of us that remain long and calm will be richly rewarded. In the meantime, check the BB's at 10 with SD set to 1.9 to see that they're constricted around price as it continues to move sideways. Something has to give in the near term. Whatever is weighing on price (bond bullies?) can't last forever. Be patient.
    Reply
  •  
    Aug 23 12:04 PM
    And one more thing in case in case it seems that I'm off base ...

    siriusbuzz.com/sirius-...



    Reply
  •  
    Aug 24 05:11 PM
    I was in BB and CC last weekend, looking for a big screen mainly,
    but wondered over to the Sirius Display, had some old receivers,
    no one manning the dept. at either store, and no new banners for
    SiriusXM. It is a little close to the approval so I cut them some slack
    as far as not wasting a lot of post merger or NOT post merger funds,
    but it is time to get on the ball and I pray they are.
    By the way, you can get the same TV, with the same resolution, etc.
    at Walmart for a hell of a lot less than either of these Electronic Giants.
    And I hate even walking into Walmart.
    Long sirius....hopefully not solong....but they will get it together...I hope they bust some shorts.
    Reply
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