Tyler Savery
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Latest Comments58 Comments
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
At this point you are arguinig for arguments sake, but sinse you will no longer retort, we might as well close the conversation by keeping things accurate.
You claim to quote me, but instead you are paraphrasing. here is what you said< "To Tyler, oh boy, you're not even worth retorting to anymore. I'll just repeat what you said. > .14 to $2.00 is the same as $7.00 to $100<"
Those who care to look will see that I did not say that ".14 to $2.00 is the same as $7.00 to $100"
Here is what I stated:
"With the stock at $0.14 the original 50,000 shares are worth $7,000. You would need the stock to appreciate 1,430% to get back to your original investment
If a 1:50 reverse split happend, the $0.14 price would become $7 and you would have 1,000 shares. You would need the stock to appreciate 1,430% to get back to your original investment.
Perception is that it is easier to go from $0.14 to $2, but in reality going from $7 to $100 is the exact same thing."
You seem to have neglected the word perception when you quoted me.
You stated, "I'm laughing to hard to respond. The tears are running down my face, I can't even type. Some with math knowledge, if they want to take the time, can explain it to him. I can't, I just can't. It hurts to laugh so hard."
When you recover from your bout of laughter, think about this....
1,430 = 1,430
You then say, "May be there are different interpretations to Mel's compensation as reported in the annual, wothless option awards or not."
There is no interpretation. Mel's options are worthless, and GAAP dictates that even though those options are worthless, they need to be accounted for in the company reporting. You initially insinuated that Mel was paid $32,000,000. He was not. Part of his "compensation&quo... ($24,000,000 worth) is in options that have no value. There is a distinct difference here, and many seem to not comprehend it.
Happy Thanksgiving, and thankfully you no longer want to respond.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
My response posted before I was done, so here is the rest:
You said, "So basically someone is wiped out to get their money back. I don't see how it could be viewed differently."
This company and the shareholders are in a tough situation. Would you give a loan to a company in danger of going to the pink sheets? Likely not. The reverse split and authorized shares are tools that the company is saying they need to get things on track. The question is whether or not you have the faith (or confidence) that this is the case.
This is why this vote is an important one, that deserves full consideration from many angles.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
My response posted before I was done, so here is the rest:
You said, "So basically someone is wiped out to get their money back. I don't see how it could be viewed differently."
This company and the shareholders are in a tough situation. Would you give a loan to a company in danger of going to the pink sheets? Likely not. The reverse split and authorized shares are tools that the company is saying they need to get things on track. The question is whether or not you have the faith (or confidence) that this is the case.
This is why this vote is an important one, that deserves full consideration from many angles.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
Dayworker, you said, "No matter how you read it, the annual report shows the compensation payment as a total of his payment compensation for the year as $32 million. Now you might want to say they're worthless, but would you turn
down 24 million options shares."
Mel does not turn them down, but they are still worthless. Mel basically has a right to buy shares at $4. Obviously he is not going to exercise that right. The options have been granted, and they carry a value. For accounting purposes, they need to show those options. Mel did not make $32,000,000. Should the stock rise to abpove the options price at some point, he can then exercise his right. Until then, he has made nothing.
You said, "In terms of your analysis of my remarks about being wiped out, I've said many times in posts that obviously it trades at the same value for lesser amounts of shares. I've spelled that out repeatedly. What it refers to, and I assumed people with the knowledge level understood that once a RS happens the lower number of shares has to rise many times to return an investment originally purchased. Example. 50 k shares purchased @
$2 cost basis is $100,000. RS at 50:1 equals 1000 shares. To get the $100,000 back the share price has to go to $100. It's much easier to get to $2 with the original 50 k, than get to $100 from say $7.50-10.00."
Using you numbers:
50,000 shares @ $2 = $100,000
1:50 reverse split
You now have 1,000 shares @ $100 = $100,000
With the stock at $0.14 the original 50,000 shares are worth $7,000. You would need the stock to appreciate 1,430% to get back to your original investment
If a 1:50 reverse split happend, the $0.14 price would become $7 and you would have 1,000 shares. You would need the stock to appreciate 1,430% to get back to your original investment.
Perception is that it is easier to go from $0.14 to $2, but in reality going from $7 to $100 is the exact same thing.
So basically someone is wiped out to get their money back. I don't see how it could be viewed differently.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
This is not to pick on you, but rather to give you what could be helpful information:
You said, "It still doesn't make any sense. If options are worthless to everyone, why do they use them as investment barter instruments."
The options Mel has differ from options that you buy as an investment. As part of his contract Mel was given the right to buy shares at a specific price in a specific windo of time. Right now that right is worthless because his right is to buy those shares at nearly $4. These options were granted by the company and not part of the optionsmarket.
The options market is not worthless. Buyiong options gives you the ability to control a certain number of shares at a certain price, and within a certain timeframe. Options contracts change in value according to the stock price, and how much time is left on the options contract. visit cboe.com his is the Chicago Board of Options. They have some great details so that you can learn more about how trading options works.
Options trades are not reported to the IRS. It is the responsibility of the individual to report gains and losses. You should speak to an accountant about how to file gains and losses on options.
You said, "AS far as RS, what has management said it was for. It's not for delisting. That's not on the table. Again, if it's not to pay off debt and get ready for private equity, what's the point of wiping out evryone's investment."
A reverse split does not wipe out an investment. In theory, the value of your investment remains the same after such a split. Typically though, reverse splits are used by companies that are facing many issues. Thus, after the split, the stock continues to fall. There are examples of companies that have had success with reverse splits, though they are the exception rather than the rule.
You said, "With the current revenue stream SIRIUS will recover, if there is a management team that can handle the cost revenue ratio with foresight."
many feel this way. It is one reason that people remain in the equity. If the revenue stream will indeed take cre of things, then the reverse split is much less dangerous. That being said, there are many who feel that the business model is flawed, and that the revenue stream can not handle the debt, and capex needed to grow.
You said, "If the vote fails to stop them because of voter absence and they get away with this, then it sends the signal to investors that management only uses shareholders money for their own purposes."
It is shareholder responsibility to participate. If they do not participate, then what message is being sent? The message is that the shareholder as a group could not be bothered.
There are many things to consider right now, and the choices are not good. This company is in a challenging time. These challenges impact shareholders. However you decide, you are at least participating.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
relmor. Just had some time, and got a ton of e-mails about using the word faith. Persoanlly, people need to vote on this issue according to their own strategies. I would never begrudge someone for voting in either direction. There are compelling reasons to vote in either direction. Typically I stay off the board here, but wanted to clarify the issue of the word faith as it relates to the article. In doing so, other issues arose that I responded to.
That being said, I am a realist to an extent, and the measures will likely all pass. I feel that people should be ready for that....especially if you voted against the proposals.
If shareholders do not vote, then the board gets to vote those shares. In all liklihood, there will be well over enough unvoted shares to pass the issues on the table. Thus, you should be ready for that eventuality. I would be stunned if over 25% of the shares actually voted.
dayworker.....
If there is a reverse split, the impact will also impact the options Mel has. There is no free pass here for Mel. His options are worthless, and likely will expire worthless.
Not defending Mel, but he has thrown many millions into stock on the open market. He is upside down as well. If I recall, his average is in the high $3's. Of course he is quite wealthy, so the impact is not as life changing for him.
My opinion is that people need to consider many things before making their decisions on the voting. List out the positives and negatives of each side of the issue, and base your decision from there. Neither choice is what I would consider good. Investors are between a rock and a hard place.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
relmor. Just had some time, and got a ton of e-mails about using the word faith. Persoanlly, people need to vote on this issue according to their own strategies. I would never begrudge someone for voting in either direction. There are compelling reasons to vote in either direction. Typically I stay off the board here, but wanted to clarify the issue of the word faith as it relates to the article. In doing so, other issues arose that I responded to.
That being said, I am a realist to an extent, and the measures will likely all pass. I feel that people should be ready for that....especially if you voted against the proposals.
If shareholders do not vote, then the board gets to vote those shares. In all liklihood, there will be well over enough unvoted shares to pass the issues on the table. Thus, you should be ready for that eventuality. I would be stunned if over 25% of the shares actually voted.
dayworker.....
If there is a reverse split, the impact will also impact the options Mel has. There is no free pass here for Mel. His options are worthless, and likely will expire worthless.
Not defending Mel, but he has thrown many millions into stock on the open market. He is upside down as well. If I recall, his average is in the high $3's. Of course he is quite wealthy, so the impact is not as life changing for him.
My opinion is that people need to consider many things before making their decisions on the voting. List out the positives and negatives of each side of the issue, and base your decision from there. Neither choice is what I would consider good. Investors are between a rock and a hard place.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
As 163888 stated, the $32 million are options. Mel Karmazin received options to by Sirius stock at nearly $4 per share. For accounting purposes the annual report shows it as a salary for Mr. Karmazin. However, those options are under water, and Mr. Karmazin has not exercised his right to buy them. Why would he pay $4 per share for options when buying on the open market is far less expensive. Thus, Mel has options to buy shares that are at this time worthless, and will likely expire worthless as well.
If the share price was over $4, you can rest assured that Mel would exercise his right to buy. We are not there though.
Thus, the company has a commitment on the books until such time that the options expire. Mr. karmazin does not have $32,000,000 in his pocket. If you are a shareholder you would cheer if Karmazins options were in the black because it would mean that the stock price is well into the $4 range.
Publications that stated Mel made $32 million were publishing in error. Mel's pay has been a couple of million with bonuses of $3 and $4 million
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
As 163888 stated, the $32 million are options. Mel Karmazin received options to by Sirius stock at nearly $4 per share. For accounting purposes the annual report shows it as a salary for Mr. Karmazin. However, those options are under water, and Mr. Karmazin has not exercised his right to buy them. Why would he pay $4 per share for options when buying on the open market is far less expensive. Thus, Mel has options to buy shares that are at this time worthless, and will likely expire worthless as well.
If the share price was over $4, you can rest assured that Mel would exercise his right to buy. We are not there though.
Thus, the company has a commitment on the books until such time that the options expire. Mr. karmazin does not have $32,000,000 in his pocket. If you are a shareholder you would cheer if Karmazins options were in the black because it would mean that the stock price is well into the $4 range.
Publications that stated Mel made $32 million were publishing in error. Mel's pay has been a couple of million with bonuses of $3 and $4 million
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
July 2009 is 7 months away. Between now and then we have the Feb debt issue, and the may debt issue. After July we have the Dec debt issue. We will also have the annual report, and the Q2 report.
If we assume that the feb debt gets resolved, there is still $700 million in debt that needs resolution. If debt is such an overhang, how much impact will getting 1/3 of it have on the equity.
This stock will need to appreciate by 600% in 7 months.
It is ironic. People want Mel to talk and express confidence, but every time he says something, he has a potential law suit on his hands. I can't say I blame him for saying nothing.
There are positives as well as negatives. It is my opinion that this stock has a ceiling well below $1.00 until they get the feb debt done. Then, it will be a challenge dealing with the new debt.
How long will the credit crisis last? Hopw long will we see poor auto sales? These are aspects of the business that would require speculation.
Mel used 12,000,000 in auto sales as a worst case scenario, and it got tossed around as if it were fact. You see, no matter what he says or does, someone is going to use it against him.
From a metrics standpoint, and if Mel hits his guidance, things will be fine (in theory). However, the price of this equity has far more than the metrics to consider.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
I am well aware of the January date. as I stated, I have written about it.
siriusbuzz.com/delisti...
That article developed a slew of e-mails challenging that I was making up the new changes. To which I responded with this:
siriusbuzz.com/delisti...
That being said, There are indeed appeals and "grace periods" , and some are simply granted as a matter of course. However, there are very specific rules and guidelines that need to be in place to have a grace period. A company must submit a plan of action that demonstrates efforts they will make to get into compliance. Part of that plan must include a reverse split. This is not saying that a company must have a reverse split, but rather that they need to have it as a consideration.
While it is true that the company can make a decision on a reverse split at a later date, it would still require shareholder approval. This would mean additional filings, a special meeting, and a lot of expenses, whereas the annual meeting is already a required meeteting that is going to be held.
If the decision is to wait until later, how does that impact the ability of the company to take care of their financing needs? Lenders will want to know where things stand NOW. Not in June of 2009. How eager will lenders be to loan money to a company on the pink sheets? These are considerations that need to be thought about.
As for the word faith. While people may attach it to religion, the meaning is broader. The point I was making was that everything that we have always counted on in making an investment decision is quickly evapoating. It is boiling dxown to your faith (or belief) in the system and the market. If you do not believe in it, you may want to exit the market. If you are unsure, you will want to watch things as closely as you can.
In the end, how much difference does it make whether the RS is authorized in December or in June, or in September? People criticise management for "not having the merger financing arranged ahead of time", and "not having everything lined up for a smooth transition", yet now, they want to tie their hands and make them once again wait until the last possible instance to make such a decision.
Management may not do what we want if they have approval now, but we also might be setting them up to fail by restricting latitude.
It is a difficult position for a shareholder to be in, and in the end, it boils down to your faith in management.
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
You state, "Tyler doesn't understand the legal position about the Nasdaq rule in interpreting the plan presented for delisting
requirement."
I do understand the rule. I also am well aware that the rule has had a change. I wrote about it. NASDAQ has latitude, but how much. You say they don't have to do this, or don't have to do that, but you are basing that opinion on faith that what you currently know is accurate.
You state, "The plan can be a built in speculation against current
economic conditions with fluidity. They are not written in stone under the current credit crisis. Nasdaq changed the rule in a policy move to abate the current number of stocks falling below $1. They will adjust for company's as needed, especially with a revenue stream of $2.7 bil."
Nasdaq can do many things. The important word here is "can". No where do you see that "NASDAQ WILL". You are thus basing your opinion on faith that NASDAQ will see things as you do. That NASDAQ will make certain rules for some companies, but not others.
You say, "Tyler still doesn't get it about management he keeps shilling for. Keep them he says. What for? There are media exec.'s more qualified to run this lucrative company. What's at stake is a $2.7 bil revenue stream that's stable. In this current financial strain that is a tremendous position to be in. It's the $2.7 bil against debt and expenses. Good management can renegotiate both debt and costs."
Shilling for? Sorry, not me. Keep management? If someone else can do the job better, then bring them in. What I stated is that is is foolish for someone to consider removing people at this juncture without a plan in place. Even here, you say, "There are media exec.s more qualified". WHO ARE THEY? What would it take to bring them on? Will they come to Sirius XM? There are many moving parts to consider.
Good management can renegotiate debt and costs. True, but we are in a time when banks are more worried about their own survival than that of a satellite radio company. Good management gets the best deal they can. The Revenue stream is great, but it does not guarantee a great financing deal. Any lender worth their salt looks at Revenue AND expenses. When you signed your mortgage, did the bank just want to know what you make, or did they also want to know your expenses?
Sirius Investors Face Difficult Decisions: It All Boils Down to Faith
Some say that faith has no place in investing, the markets, or the economy. for those people, I ask, what gives value to the dollar. There is no gold standard.....only a level of confidence that a dollar will carry a certain value.
With these economic times, people have lost faith in the system. Some more than others. Individual equities are at the mercy of success of an economic system based on faith.
I was not at all suggesting that people base their investment decisions on faith, but rather that faith has become the only thing left. What I am saying is that investors (in virtually any equity) are faced with difficult decisions. Numbers that are okay do not matter. Book values seem to have gone out the window, and even good news is meet with a high degree of skepticism. whether we like it or not.....whether it is prudent or not.....whether it is scientific or not, we are all faced with having to question our level of faith in the system that exists. Perhaps that concept is too deep for some to grasp, but peel away the layers, and you get down to your level of "belief" or "faith".
People ask me if I am for or against the reverse split. I have two choices, and neither is very appetizing. I do not like the choices offered, but have to choose one. karmazin stated that the reverse split is for the purpose of listing requirements. Given a choice of seeing the equity delisted, vs. doing a reverse split, I will take the reverse split. can the decision wait? Sure. The company can hold a special meeting in a few months, and spend a couple of million to make a decision later, in the 11th hour. How wise is that? NASDAQ rules dictate that the company must have a plan to get the equity into compliance. Part of that plan needs to include a reverse split. Come mid January, if a reverse split is not approved, the company will be out of compliance on two fronts. A stock price that is too low, and a plan that is not acceptable. That could accelerate the delisting process, and remove the companies ability to appeal delisting.
No, I am not a fan of reverse splits. i am also not a fan of pink sheets. Investors have a lot of serious issues to consider. I have run into many that have not even thought through what happens if the way they vote comes to fruition. That in and of itself is scary
Who'll Blink First: Sirius, Loral or the Banks?
There are many readers who can not access the analyst reports. It is one reason I do cover them. If the information seem redendant to you, I apologize. Knowing the sentiment of the street on an equity you are invested in is prudent in my opinion.
The Loral line is nothing new. However, Loral has had their own troubles of late, and I wanted to see both their report as well as Sirius'. Knowing that JP Morgan is standing behind Loral is better than not knowing it.
Sats are not launching this year, and IMO it is the ability for Sirius to draw on past payments that is the differentiating factor here. Future payments can be delayed to a certain extent. Getting cash back (agaist the credit line) on payments already made is what carries the leverage.
Auto Sales: Good News on the Horizon?
There was no intent to mislead you. The article is published on SiriusBuzz.com, and was about how the OEM channel (an important partner to satellite radio) could be seeing a turn around. Seekingalpa picked up the story and likely (because it mentions Ford, GM, etc.) it was under those tickers here as well.
Satellite radio aside, we are perhaps appraching the bottom in terms of sales of cars, and while the article is not specific to the auto channel, some of the numbers, data, etc. could be relevant.
The intent was not an article about the auto industry, but how it relates to satellite radio. I can see how someone not interested n satellite could be confused by the title, but please bear in mind that the original piece came from SiriusBuzz.com, which by nature of the name is a site about satellite radio.