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Sirius XM Belt Tightening Begins

by: Brandon Matthews August 27, 2008 | about stocks: SIRI    

Brandon Matthews

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It would appear that one of the first casualties of the Sirius XM (SIRI) merger is AMTC, Applied Media Technologies Corporation. Great expectations had been placed on AMTC, the company that enjoyed an exclusive relationship with Sirius as a stand-alone company for many years, in the hopes of producing a high number of Sirius Music For Business subscriptions and helping Sirius to become a stronger competitor to Muzak.

A check of Sirius XM’s marketing partners no longer lists AMTC as a Sirius partner and AMTC’s website has also removed all of its Sirius links. A phone call to AMTC confirms that AMTC is no longer selling Sirius XM for business.

Recently, I had noticed that Sirius XM had added several other companies to their branding efforts including Dynamic Media, Info-Hold, and Turnkey Media Solutions. These three companies all offer both Sirius and XM business subscriptions, which differ from the Sirius-only offering of AMTC. The XM music for business web page does not list any specific marketing partners.

The original numbers of the AMTC deal are buried in overall marketing costs on the company’s financials, so it is yet unknown as to how much this will save the company in terms of dollars. Although negotiations may be continuing between the two companies, it looks as though the line item cost reductions analysts have been expecting, have in fact begun.

Position: Long SIRI

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This article has 11 comments:

  •  
    Aug 27 07:38 AM
    I think this was a good mive and don't even understand why AMTC could add to the SIRI bottom line because restraints, companies, etc.. could go directly to SIRI for the service. Hopefully SIRI doesn't have a clause in their retail contract limiting multiple listeners or prohibiting companies from using the service. Perhaps a loophole could be to include earplugs with the appetizer.

    All kidding aside, it looks like SIRI alone spent more that 100 million last quarter related to sales/marketing and acquisition costs and belt tightening can add substantially to the bottom like. Sales/Marketing cost savings are one of the biggest benefits of the merger and it's good to see management digging deep to cut costs.
    Reply
  •  
    Aug 27 07:55 AM
    It seems as tough XM was a big spender, had not a real grasp of expenses like Sirius has. I'm sure as Mel mentioned there has been a big overhaule in XM management and big cut on unecessary expenses. The are focused on growth as one company with one direction. All of that will materialize after the Holiday as Mel Karmazin said. Tightening the belt actually is a positive thing, it shows disipline and a good management
    Reply
  •  
    Aug 27 08:25 AM
    SIRI stock price will move higher by weeks end ahead of Conference call next week. I suspect a close above $1.40 and a real move above $1.50 next week.
    Reply
  •  
    Aug 27 09:10 AM
    Brandon, good update. Please relate the move to prospective impact on company value. In a past exec position (engineering dept. VP, privately held company), I saw value decline as more and more austerity measures were implemented. Sales had overpromised based on company R&D, Engineering, Manufacturing, and service/support capacity (had sold "vaporware" and expected fast-paced internal innovation by too few resources). Backlogged projects impacted contract and other customer satisfaction. In the same extended period, external risk to a major project for a Fortune 500 customer was realized when the customer killed the project due to a matter beyond our internal control: a senior management shakeup. (Old cutomer org president out, new president put moritorium on all projects to scrub ROI and decide which to keep or kill). Our internal focus shifted to damage control at the expense of than value delivery and growth. We implemented line item cut after cut and went through two rounds of painful downsizing to compensate for internal smoke blowing by Sales (which came out relatively unscathed) and an externally driven impact that hurt revenue forecast. Hard lessons were learned. Very hard. So, when reading your reports and other information about Sirius XM's circumstances, I look for qualified comments about the impact of belt tightening on company prospects. In other posts I have remarked on why I am long and will remain so. The example I give above is about another company with different circumstances. Sirius XM has tremendous potential--but also great financial and other challenges. Keep up the great reporting and give us more....
    Reply
  •  
    Aug 27 09:34 AM
    who can save you?My SIRI
    Reply
  •  
    Aug 27 10:13 AM
    The better play for the commercial sub space would be for Sirius/XM to take out the Muzak/DMX deal which is out being shopped by Moelis. Recent comments from Muzak CEO says he expects a deal within 60 days.
    Reply
  •  
    Aug 27 10:16 AM
    Seems like the best way to accelerate the commercial sub space would be for Sirius/XM to take out the Muzak/DMX deal which is being shopped by Moelis. Recent comments by Muzak CEO said he expects a deal within 60 days.
    Reply
  •  
    Aug 27 12:35 PM
    If Christ would come down and say SIRI sucks, these imbiciles would say he's trying to drive the price down so he can buy in cheaper.
    SIRI stock has to be the worst performing stock in their portfolio yet they refuse to sell it. DUH! Herad any good farts lately?
    Reply
  •  
    Aug 27 12:46 PM
    MMMMM, User 251186...why would you even think about selling now since stocks so cheap? Wait it out buddy and don't watch it every hour, day, etc
    Reply
  •  
    Aug 27 01:02 PM
    Cramer is still at it. Your credibility is shot Cramer.
    Reply
  •  
    Aug 27 03:43 PM
    Mad man Cramer should soon be history. He reminds me of Obama a flip flopper.
    Reply
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