Sirius Satellite Radio: Seriously Down and Going Lower

By: Mike_Stathis

It’s a bit funny to see that the SIRI stock pumpers are still at it, despite facing nothing but absolute humiliation after making ridiculous claims and clinging onto their delusions of grandeur as the stock collapsed by over 95% after merger with XM.

In the end, the stock price says it all. Since the dotcom bubble collapsed, reality has set in. SIRI has done nothing but fall; with good reason. The company has been very poorly run. It’s had a terrible strategy, ridiculous payouts for content and unbelievably ridiculous payouts to executives. The management has been horrendous from day one and remains so.

As you will recall, these pumpers (and their brainwashed cheerleaders who happened to be stuck in the stock) were thinking the merger would be great and the price would soar.  I suggest two things to the sheep that have clung onto the propaganda. First, beef up your memory so you can recall what these guys were saying before. You might want to read their archives. Second, check the track record of every person before you bother the listen or read what they have to say.

I won’t waste anyone’s time (including my own) making a case for why SIRI is one of the worst managed companies I have seen in many years. Instead, I will point you to a couple of pieces I wrote on SIRI while back so you can be reminded of the truth. http://www.avaresearch.com/article_details-166.html
 
http://www.avaresearch.com/article_details-167.html

Remember, this is a company that has not made a single penny of profit since inception over fifteen years ago. Meanwhile, Stern and the executives have made out big at the expense of misguided shareholders. Combined, these payouts are likely to have surpassed $2 billion since inception. Maybe now you know why SIRI’s debt is so high.

I’ve never seen a stock (besides pink sheets and bulletin boards) whose shareholders consisted of so many unsophisticated investors. Perhaps this explains the widespread attempts by so many to pump the stock all over stock chat boards, forums and financial websites that many go to for credible guidance – as if individual investors make stocks move; just another example of the “insight” shared by SIRI pumpers.

Despite all of the “coming announcements soon from Mel” and all of the other desperate pumps, the stock has done nothing but go down for many years. It’s time to wake up and realize when people are spreading propaganda for their own interests. I can tell you this. I have never bought SIRI, even to short it.

As the records show, I knew the stock was headed down. In fact, I still say it will be sold for pennies or go bankrupt. I make it a rule to stay away from extreme forms of trash, even for shorting.

It always comes down to management. And that does not bode well for Sirius. The Chairman is suspect at best, due to his involvement with Global Crossing. And similar to Stern, Karmazin’s best days are way behind him. He’s just another old boy from the media who’s out of touch with modern media and business trends.

But SIRI’s management appears to understand how to screw shareholders and get media coverage on TV networks watched by sheep. Sirius management has pulled every dirty trick out of the book to make it to the next executive stock option payday.

In my opinion, the company has the many characteristics of firms that end up filing for bankruptcy. But at least many of these companies have a history of profits. Sirius has abused the Wall Street mechanism, making huge bets, paying out eye-popping compensation to executives, Stern and others. This has diluted shareholder equity in a manner similar to what I have seen done with bulletin board and pink sheet stocks. It’s really a sad situation to behold. These are the real issues that should be highlighted when the media mentions Sirius, not some speculative forecasts, which as we have seen over and over, rarely pan out.

When you spot a company that has failed to turn a profit since inception, burned through billions of dollars irresponsibly, and is absolutely dependent upon a merger for the slightest chance of survival, you had better not take what management says at face value. You need to make certain their methods, along with all assumptions make sense.

The reality is that the recent market rally, which served to help out SIRI should be taken as an opportunity to exit because the stock is headed back down. And I wouldn’t bet on the future of this dog. It’s a sucker’s bet.

I want to encourage all who seek the truth and valuable guidance to follow me to my new site www.avaresearch.com (coming in a few days). You won't see me pitching gold or investments to you like others. You will continue to receive nothing but unbiased top-tier insight, education and commentaries.

By Mike Stathis
www.avaresearch.com

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

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