Can SIRI and XMSR stay alive?

[RunTrade]

I have done an analysis of SIRI and XMSR (mostly SIRI so far) and although they have reached a large market and can arguably obtain many more customers, both of their F/S look dismal.

Both cannot sustain themselves without the finance of shareholders. Especially, SIRI... Shareholders Equity has been cut in half in the last 12 months and they continue to borrow large amounts to keep a positive cash flow.


My personal opinion is that they are both in too far over their heads. It is just a matter of time until they collapse.


-R.T.


I have in-depth analysis available if you want to see it.

 

[SethArb]

A: what is your background in fundamentals ?
B: do you have a position in either XM or SIRI ?

-I have in-depth analysis available if you want to see it.-

 

[RunTrade]

Quote from SethArb:

A: what is your background in fundamentals ?
B: do you have a position in either XM or SIRI ?

-I have in-depth analysis available if you want to see it.-

Hey Seth

A: Not sure what type of answer you are looking for...I ran some adjusted common-size statements, trend statements, and a few financial ratios on both companies. Currently I am working altman's Z-score model to see the probability of bankruptcy in each company. If by background, you mean experience than I guess none because I am still a college student.

B: I currently do not have a position in either, but if I feel comfortable with my analysis and results I may look to purchase some long term puts (1-2 years) in either/both of the companies.

 

[sportmatt37]

I would love to see research on siri...i have a long at 6.02

 

[Enfinity]

Nothing wrong with honesty or being a college student in my opinion, but that's my opinion. If you want to throw it out we can take a look, and those that want to comment can.

I believe feedback is necessary for learning. The feedback from the market when you screw up is way worse than when you are trading on paper...learn as much as you can before your money goes in!

 

[RunTrade]

a quick summary of my research on SIRI:

(This is all in reference to a long-term approach)

Sirius has not even been close to being able to sustain itself on operating activities alone. The primary reason for the company being able to continue to operate is from the sale of common stock and borrowings (the most recent of alomst 1/2 billion). Don't be fooled by the fact that some cash flow occurs from investing activities. over 90% of that cash flow originates from sale of stock or loans that are simply invested, later to be liquidated. Equity has also dropped about 42% over the last 12 months.

An argument against the above would be that SIRI is using large amounts of capital to expand and obtain more subscribers (this is even the argument the company often states). However, if the Cost of Revenue was effectively lowered (even to zero) total operating income for the t.t.m. would still be close to $450,000,000 in the red.


...just some thoughts as of now...

 

[sportmatt37]

Could I get a copy of your research or if you want to keep that private its no problem....just that i am a tech trader and i really don't know much on fundamentals

 

[RunTrade]

sport,


anything specific you want to look at?

I have a bunch of excel files right now...nothing formatted to look nice yet

I'll show you this (just a C+P), because I think it is a good indicator that SIRI has begun to tumble downhill....although the stock price has not shown any signs of it

It is of the last 4 qtrs... If you look at the trend analysis at the bottom you can see several strong indicators that the company may be in big trouble.

1) Liabilities are growing significantly faster than assets (current and total)

2) A large LT debt was aquired this past qtr.

3) Stockholders Equity is falling fast.

and dont forget, retained earnings continues to go further in the red.

 

[sportmatt37]

thanks for your help man

 

[Choad]

I know the only thing that matters is the stock fundies, but as a "Peter Lynch" consideration I subscribe to XM and I love it.

For that $13 bucks a month I get tons of audio goodies. I listen in the car, and even at home sometimes. Can't get enough.

JMHO