Loading...
Symbols:
Authors:

How the Rescue Plan Affects Sirius

by: Tyler Savery October 02, 2008 | about stocks: SIRI    

Tyler Savery

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Only days after an attempted financial rescue went down in flames, the Senate has passed a new bill that has some “added characteristics” designed to, in theory, help protect Main Street. The bailout plan is a polarizing issue, but there is little in the bill that really protects similar problems from happening again.

Whether you are a fan of the bailout or not, you would be best served knowing the status of it if you are invested in the markets. The issue impacts everyone, and virtually no business is insulated from it. Credit is hard to come by, and that slows down the system. People are scared, and when someone is scared a “fight or flight” instinct kicks in. In this case, fighting is nearly impossible, so everyone is taking their money and going home.

Some readers will likely express frustration that this article is not related to satellite radio. The fact of the matter is that it is indeed an integral part of why this and so many other equities have taken a beating. Sirius XM Radio (SIRI) has debt to refinance. Even though they should do it with relative ease, the fact that they are looking for a loan makes people nervous. If the company announces a resolution to the February converts, then all will be well….at least until the Fall.

About a week ago I found myself looking for a new car. I drive a lot, and my old car was at the 200,000 mile point. It was in need of a bit of work (again), and I found myself at the crossroads of putting more money into an existing car, or to trade it in and be done with it. Ultimately I decided to get new wheels. After deciding what car I wanted, and what options I wanted, I cut my best deal, and it was off to the financing department to see if they could beat the rate I had already secured. They couldn’t, so I went with my own lender, but while there I inquired about the credit crisis. The answer I got was that many people were having trouble getting their loans, and even people with “good credit” found it a challenge to get financed. That bore out when the auto sales numbers were released Wednesday. Thus, the issue is already being felt on Main Street, and the whole economy seems to be hinging on what will happen in the house.

Will the Senate passage bring the markets up Thursday? Perhaps, but it is Friday’s action that will be the determining factor. Stay tuned.

Position - Long SIRI

Related Articles

This article has 114 comments:

  •  
    Oct 02 04:39 AM
    Sirius and XM will be greatly missed by road jockeys like myself, I hope this combined satellite radio company regains strength so we dont find ourselves without the many sports coverages and talk radio as well as the variety of music options or our days on the road will become long and lonely days. Its awesome to be able to listen to the radio without losing our signal as we drive from state to state. Support the merger with a purchase of XM's great low stock price, it may make our days on the road continue with high quality entertainment for years to come. Signed the ROADJOCKEY
    Reply
  •  
    Oct 02 06:38 AM
    Thanks for the "Breaking News". Did you say Sirius XM has debt to pay off in February? No kidding? And if they solve the convert issue, people will be relieved? Holy crap! And did you say that with this crisis in credit, it is harder for individuals to achieve auto loans. Wow. You are on top of your game. Any news on this brand new music genre gaining popularity... rock and roll. Also, I have heard that this new band called the Beatles are playing on American Bandstand tonight, they some cool cats. Maw and Paw are goin to fix us a big ol' pile a grits when paw gets back from his moon shine run to Jersey.
    Reply
  •  
    Oct 02 07:16 AM
    This is great, the stock might hit 70 cents today!!! WHOO HOOO!
    Reply
  •  
    Oct 02 07:23 AM
    Imagine you're me. You own 25,000 shares at an average of $2. - Would you jump off a bridge?
    Reply
  •  
    Oct 02 07:24 AM
    For all you investor/subscribers, as of Tuesday you can add the best of XM or Sirius to your accounts. If you were interested in one of these packages you can call and add it today for $4. Better yet, prepay for a year, get a discount and we can pump some funds back into the company. It was well worth it for me. Now I finally have Howard and the NFL in my wifes car.
    Reply
  •  
    Oct 02 07:51 AM
    hey ha ha I own 66,000 shares and I also lost tons but I am going to hang in there
    dont jump!!!!
    Reply
  •  
    Oct 02 07:53 AM
    I liked the article. There really is no new news on SIRI and everyone is glued to the bailout bill. The economy is the main reason SIRI is suffering. If the economy had been good for the past 2 years SIRI would be in the black and so would we.

    Just remember who put us here in November. Obama and Biden took millions for Fannie, Freddie, and other mortgage lenders for turning a blind eye towards them, selling their vote and selling us out. By the way, they are keeping the money. Barney Frank did the same and even fought to stop any oversight while the republicans, like McCain, were calling for it. Sarah Palin never took any bribe money. Then the democrats try to play us all for fools by blaming the president and his administration who have been concentrating on keeping us safe and trusting the congress to do its job on the economy.

    The democrats tried to kill satrad by stalling and finally voting against the merger. If the merger had come a year earlier SIRI might also be in the black. And finally there's Nancy Pelosi, who this week took top seed for stupid bitch.
    Reply
  •  
    Oct 02 08:13 AM
    Lol, Muley!
    Reply
  •  
    Oct 02 08:45 AM
    Here' some news hitting the wires this morning:

    XM subscribers can add "The Best of SIRIUS" channels by calling 1-866-9SIRIXM (866-974-7496) or go to XMRadio.com for complete details. SIRIUS subscribers can add "The Best of XM" channels by calling 1-888-7BESTXM (888-723-7896), or go to SIRIUS.com for complete details.

    "One of the most exciting benefits of the SIRIUS and XM merger is giving subscribers the chance to expand their subscriptions to include 'The Best of Both' services. Given the popularity of programming on both SIRIUS and XM, we expect many subscribers will upgrade their current subscriptions," said Jim Meyer, SIRIUS XM Radio President, Operations and Sales. "It's hard to imagine an XM subscriber who wouldn't be interested in adding Howard Stern and NFL games, or a SIRIUS subscriber who wouldn't want to get Oprah's channel or follow the games of the NBA and NHL, and the world's best golfers on the PGA TOUR."
    Reply
  •  
    Oct 02 08:48 AM
    And This:

    A La Carte - The First Ever in Subscription Media

    Today also marks the official launch of a la carte-capable radios and the unveiling of A La Carte programming packages. The first a la carte-capable radio is the SIRIUS Starmate 5 (MSRP: $129.99) now available at Best Buy, Crutchfield, RadioShack and regional retailers. Starmate 5 radios are also available at shop.sirius.com.

    More information about the new programming packages and pricing for XM and SIRIUS is available online at xmradio.com and sirius.com.

    I hope they put enough of these radios out there!!!
    Reply
  •  
    Oct 02 08:53 AM
    Muley, Stan.... , enough already. Take your profits on NCC and move on unless you have some insight on Sirius XM Radio.
    Reply
  •  
    Oct 02 08:58 AM
    I own 23000 shares at 2.76 a share and no I am not jumping on the other hand it is less that 10% of my holdings. Some other holdings are GE and T it is all about balance.
    Reply
  •  
    Oct 02 09:02 AM
    I still have a few thousand shares in the kids accounts so I'm still cheering for SIRI.

    SIRI should let us all establish Sirius e-mail IDs. Then give us an e-mail marketing campaign note. Then we could send that campaign to everyone in our address books.
    Reply
  •  
    Oct 02 09:08 AM
    Sirius already has investor alerts and press releases sent to your e-mail address. The above releases are on the wire and in my e-mail account for my distribution from the company to all of my e-mail buddies.
    Reply
  •  
    Oct 02 09:10 AM
    Also, I'll be day trading SIRI, but not shorting it. That means that if I see it take a big dip I may be propping up the price by buying it, depending on other market conditions.
    Reply
  •  
    Oct 02 09:22 AM
    TYLER, Please address the issue of turning on idle radios. Would it cost much to do? If not then why not? If I understand it there are 20 Million idles radios out there(in vehicles). Some of these vehicles equiped w/ Sat. radios have changed ownership and with the "best of" new programimg , isn't this a great opp. to bring some of these people back? If it cost Sirius xm about $100 for each new car to have Sat. Radio, it seems actually stupid not to turn them all on for a limited time to show off the new content. If you only get 1 out of 10 to subscribe thats 2 Million new customers. Also I bet most consumers still are not sure what Sat. Radio is all about. Where is the MARKETING, have not seen anything as far as advertising etc. We are aware of Sat. Radio, but there is a lot of work to educate the average consumer what this product is really all about. Who is minding the store? Would love to hear your thoughts on these questions.
    Reply
  •  
    Oct 02 09:49 AM
    Ha Ha I own siri..................... only most siri investors were in your shoes. Good average, now start working it even lower. You're in the drivers seat. killer.
    Reply
  •  
    Oct 02 09:53 AM
    above..... If only.
    Reply
  •  
    Oct 02 10:31 AM
    Been averaging down through the whole drop. From $3.13 down to $1.75. Buying at drops. This is a solid product that isnt gonna disappear. Take advantage of what seems like a bad situation. We will be riding the wave soon enough.
    Reply
  •  
    Oct 02 10:31 AM
    Muley get a life. This is no place for your AZZ backwards political opinions. Especially when you have it totally WRONG. it is in fact republicans that were the majority in cingress for the past twelve (12) years. In Year 2006 democrats took over and four (4) months later tighter regulations were placed on Fannie and Freddie under the leadership of Barney Frank. Do some un-bias research and find the truth. Pelosi this weeks stupib bitch????? You kidding me, right..
    Reply
  •  
    Oct 02 10:51 AM
    Nobody cares about political beliefs here. There are forums for that. This is a SIRI forum. Yes, there are political factors involved that have caused trouble in the market resulting in the price of SIRI. We are all aware of that. Lets just keep it out of this forum.
    Reply
  •  
    Oct 02 11:05 AM
    Politics affect SIRI more than any other stock. If the democrats win then the FCC board will have mostly democrats. The WILL review the merger decision by the previous board and will force SIRI to maintain prices for a further 3 years. They will kill SIRI!
    Reply
  •  
    Oct 02 11:08 AM
    And you know that because your a genius and clairvoyant. Like some one else said, move on.
    Reply
  •  
    Oct 02 11:11 AM
    Muley............. I have to concur with you on your appraisals of those particularly lame politicians.
    Reply
  •  
    Oct 02 11:11 AM
    And what genius puts a volatile spec stock in thier kids' portfolios? Why not put large market cap, high div yield stocks in there. Why take a chance at bankrupting the kids future. Idiot
    Reply
  •  
    Oct 02 11:11 AM
    GotSIRI, you democrats have a very short memory, about a lot of things.
    Reply
  •  
    Oct 02 11:16 AM
    Google, Apple, & Microsoft were all once speculative stocks.....
    Reply
  •  
    Oct 02 11:21 AM
    4play2...... Now that's backing into a political conversation, isn't it?????
    Reply
  •  
    Oct 02 11:21 AM
    muley - Who said I was a Democrat?

    At least Im not a moron who waste his time trolling around discussion boards trying to beat people when they are down.

    And I would say its the Republicans that have the short memory. The always seem to forget how they had control of Congress for 12 years and enacted alot of the things that ignited this mess. But I like it, because I am buying great stocks on sale, while others die a slow painful death. I would say your memory goes back about 14 months.

    And like I said, this isnt a poltical forum, so I digress.

    GO BIG BLUE DOG.
    Reply
  •  
    Oct 02 11:30 AM
    Hey guys..................... siri moving into buying territory again. .5966 now, have a buy in at .55............ will have to keep a sharp eye, maybe do some tweaking ......... and get more down here at these fire sale prices. killer.
    Reply
  •  
    Oct 02 11:31 AM
    Read the title of this article. The article is all about what's going on in politics and how it effects SIRI.
    Reply
  •  
    Oct 02 11:35 AM
    Just picked up 10K more shares @ .595... now we wait...

    btw...if you missed this article on car sales from TheStreet = pretty good.

    www.thestreet.com/_aol...
    Reply
  •  
    Oct 02 11:37 AM


    Merrill Lynch - Cohen
    We still like the fundamentals of the underlying business and believe there is a good chance Sirius will be able to refinance.

    GOLDMAN SACHS
    However, the nature of our concerns has shifted toward the viability of the business model given current sub economics.

    BARCLAYS
    Initiated coverage on Sirius XM Radio with a buy and a $1.80 price target, which is more than double current prices.

    Mel:
    - Synergies
    - Postive Cash Flow by next year

    You wont be able to catch up once the Blue Dog starts running.
    Reply
  •  
    Oct 02 11:44 AM
    sl62 little luckier than me. I picked up 10K at .67
    Reply
  •  
    Oct 02 11:45 AM
    killerkaul, I've been watching the level ll trades and their appears to be a pretty good wall at .59. Your .55 might not get in today.
    Reply
  •  
    Oct 02 11:48 AM
    Oh and cos1000...

    been a little while...good to see you man...
    Reply
  •  
    Oct 02 11:52 AM
    Far Away...still not a bad price..you're on the floor either way. Just a note....NEVER buy right at the open. MM's will always do what's called a "shake out"... you're good though for take off...
    Reply
  •  
    Oct 02 11:58 AM
    GotSIRI, you are way too immature and emotional to own stocks. Perhaps you should liquidate and try paper trading for a while.
    Reply
  •  
    Oct 02 12:01 PM
    4play2
    you wont read this,but here it is anyway.
    more available if you like!!

    The following is fact and not in dispute. Every
    >>> word has been taken from company records, government agency
    >>> records, court records and newspaper articles at the time.
    >>>
    >>>
    >>>
    >>> Here is a quick look into 3 former Fannie
    >>> Mae executives who have brought down Wall Street.
    >>>
    >>>
    >>>
    >>> Franklin Raines was a Chairman and Chief
    >>> Executive Officer at Fannie Mae. Raines was forced to
    >>> retire from his position with Fannie Mae when auditing
    >>> discovered severe irregulaties in Fannie Mae's
    >>> accounting activities. At the time of his departure The Wall
    >>> Street Journal noted, ' Raines, who long defended the
    >>> company's accounting despite mounting evidence that it
    >>> wasn't proper, issued a statement late Tuesday conceding
    >>> that 'mistakes were made' and saying he would assume
    >>> responsibility as he had earlier promised. News reports
    >>> indicate the company was under growing pressure from
    >>> regulators to shake up its management in the wake of
    >>> findings that the company's books ran afoul of generally
    >>> accepted accounting principles for four years.' Fannie
    >>> Mae had to reduce its surplus by $9 billion.
    >>>
    >>> Raines left with a 'golden parachute
    >>> valued at $240 Million in benefits. The Government filed
    >>> suit against Raines when the depth of the accounting scandal
    >>> became clear.
    >>> housingdoom.com/2006/1.../ . The
    >>> Government noted, 'The 101 charges reveal how the
    >>> individuals improperly manipulated earnings to maximize
    >>> their bonuses, while knowingly neglecting accounting systems
    >>> and internal controls, misapplying over twenty accounting
    >>> principles and misleading the regulator and the public. The
    >>> Notice explains how they submitted six years of misleading
    >>> and inaccurate accounting statements a nd inaccurate capital
    >>> reports that enabled them to grow Fannie Mae in an unsafe
    >>> and unsound manner.' These charges were made in 2006.
    >>> The Court ordered Raines to return $50 Million Dollars he
    >>> received in bonuses based on the miss-stated Fannie Mae
    >>> profits.
    >>>
    >>>
    >>>
    >>> Tim Howard - Was the Chief Financial Officer
    >>> of Fannie Mae. Howard 'was a strong internal proponent
    >>> of using accounting strategies that would ensure a
    >>> 'stable pattern of earnings' at Fannie. In everyday
    >>> English - he was cooking the books . The Government
    >>> Investigation determined that, 'Chief Financial Officer,
    >>> Tim Howard, failed to provide adequate oversight to key
    >>> control and reporting functions within Fannie Mae,'
    >>>
    >>> On June 16, 2006, Rep. Richard Baker, R-La.,
    >>> asked the Justice Department to investigate his allegations
    >>> that two former Fannie Mae executives lied to Congress in
    >>> October 2004 when they denied manipulating the
    >>> mortgage-finance giant's income statement to achieve
    >>> management pay bonuses. Investigations by federal regulators
    >>> and the company's board of directors since concluded
    >>> that management did manipulate 1998 earn ings to trigger
    >>> bonuses. Raines and Howard resigned under pressure in late
    >>> 2004.
    >>>
    >>> Howard's Golden Parachute was estimated
    >>> at $20 Million!
    >>>
    >>>
    >>>
    >>> Jim Johnson - A former executive at Lehman
    >>> Brothers and who was later forced from his position as
    >>> Fannie Mae CEO. A look at the Office of Federal Housing
    >>> Enterprise Oversight's May 2006 report on mismanagement
    >>> and corruption inside Fannie Mae, and you'll see some
    >>> interesting things about Johnson. Investigators found that
    >>> Fannie Mae had hidden a substantial amount of Johnson's
    >>> 1998 compensation from the public, reporting that it was
    >>> between $6 million and $7 million when it fact it was $21
    >>> million.' Johnson is currently under investigation for
    >>> taking illegal loans from Countrywide while serving as CEO
    >>> of Fannie Mae.
    >>>
    >>> Johnson's Golden Parachute was estimated
    >>> at $28 Million.
    >>>
    >>>
    >>>
    >>> WHERE ARE THEY NOW?
    >>>
    >>>
    >>>
    >>> FRANKLIN RAINES - Raines works for the Obama
    >>> Campaign as Chief Economic Advisor
    >>>
    >>>
    >>>
    >>> TIM HOWARD - Howard is also a Chief Economic
    >>> Advisor to Obama
    >>>
    >>>
    >>>
    >>> JIM JOHNSON - Johnson is Senior Obama Finance
    >>> Advisor and was selected to run Obama's Vice
    >>> Presidential Search Committee
    >>>
    >>>
    >>>
    >>>
    >>>
    >>> OBAMA PLANS ON CLEANING UP THE MESS -
    >>>
    >>> Would you trust the men who tore Wall Street
    >>> down to build the New Wall Street?
    >>>
    >>>
    >>>
    Reply
  •  
    Oct 02 12:05 PM
    nice Big Ron. Our theme for the election should be
    'Remember The Merger'
    Reply
  •  
    Oct 02 12:20 PM
    Again, Ghezz. Big Ron, These articles are all old news. You seem to forget that Fred Raines issued a press release the same day the republicans issued the false report of his involvement in the Obama campaign, that HE IS NOT NOR HAS NOT BEEN ASSOCIATED WITH OBAMA'S campaign. Stop spreading the McFalsehoods. I guess the other golden parachutes just started two years ago as well under this uh,um, oh president?
    Reply
  •