About Author: Andrew Montero

avatar
Website
http://www.kingofalltrades.com/

Posts by Andrew Montero

0

SIRIUS XMs Bullish Future

By
Andrew Montero
– September 19, 2011
Share

Flash
Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now


By Andy Montero

Several days ago on September 14th Sirius XM’s(NASDAQ: SIRI) Mel Karmazin presented at the Bank of America/Merrill Lynch Media, Communications and Entertainment conference. What was remarkable about that presentation was the fact that Karmazin, the CEO of Sirius XM was willing to lay out guidance for 2012 quite early compared to other years. As both a subscriber to the service and an investor I found that willingness to be a very bullish sign with regard to the stock price.

Sirius XM reiterated 2011 guidance on revenue of 3 billion, as well as their previous EBITDA guidance of approximately 715 million, and their free cash flow guidance of 400 million dollars. The company went on to present guidance for 2012 with a 10% increase of revenue to approximately 3.3 billion dollars, an EBITDA increase of 20% to 860 million dollars, and an astounding 75% increase in free cash flow to 700 million dollars. Looking at these numbers, it is very easy to see a bullish future in the short term at least, and more than a stretch to see a bearish case right now, even with a struggling economy.

Sirius XM also provided several insights to the Certified Pre Owned vehicle program they have created thru their automotive partnerships. These programs are gaining traction and the company is very happy with the numbers they are seeing, even while stating that the numbers are not as good as the OEM new car program. Karmazin also informed listeners that programming costs are continuing to go down. Karmazin made sure to state that the 2012 guidance was conservative due to the economic climate as a whole.

It’s amazing that some writers out there continue to lie and use fear tactics in the faint hope they can scare some retailers to sell their shares at current prices. Time and again, patience has proven to be the best course of action. Adding to your Sirius position on drops over time has proven to be the name of the game. The company continues to achieve remarkable synergies; the major ones of which we are starting to see now. Again, going forward there is no satellite building or launch costs for at least the next 4 to 5 years. On top of that the company will require less satellite going forward as it currently operates.

Satellite 2.0 will feature pause and replay as well as some other customization features such as on demand, and more channels, approximately 30 more. Many of which will target the Hispanic demographic, as Sirius XM has recognized the importance of the growing Hispanic population and its purchasing power. The channel expansion will include content coming out of Mexico as well as other Latino programming to complement the 3 channels already available on Sirius XM for the Hispanic community. There will be 2 new retail radios coming out in time for the holidays this year that will have 2.0 capabilities. 2.0 capability is expected to be fully integrated into the OEM channel by 2013, but will start appearing in 2012. Sirius XM filed an 8k with details from the media conference and it is available to view on the company website here; http://investor.siriusxm.com/

Disclosure: Long Sirius XM

Tags: , , ,
3

Taking Oil Speculators and Our Government to Task

By
Andrew Montero
– September 8, 2011
Share

By Andy Montero

     With the recent drop in the markets, oil prices took a considerable drop as well. We have seen oil prices drop from around 100 bucks to the low to mid 80 dollar price lately. One very noticeable situation has many a consumer annoyed though, as the pump price for gasoline has not dropped correspondingly with the drop in the price of oil. Say what you will, but when oil was going up, the general public watched in horror as the pump price for gasoline flirted with and above 4 dollars in some regions of the country. When oil came down to the low 80 dollar range, it was time to see gasoline drop under 3 bucks. Percentage wise, this was the right price to see. Instead, we have seen gasoline prices hold steady and not drop very significantly at all once they bottomed around 3.50 or so. There may be slightly cheaper gas in some areas, but in general the price has remained above 3 bucks.

There has been no outrage, no political posturing, just a general acceptance that it is what it is. In my opinion, there needs to be some anger and some phone calls made to your elected representatives offices. Those who make a killing speculating with oil are conditioning us to accept whatever they feel like doing. It is borderline criminal that gasoline is over 3 dollars a gallon at this point and totally unacceptable. These prices have caused every company that makes every product or grocery we buy to raise their prices to reflect the higher cost of fuel. Additionally, with jobs paying less, workers and their families are feeling the effects in their commutes and their everyday lives.

If we allow ourselves to be conditioned and do nothing, then we have no one but ourselves to blame. It is time for all of us to speak loudly and demand that gas prices and speculation on oil be thoroughly investigated. Each and every time there are complaints, we are pacified short term only to be screwed over again. We each need to let our representatives in Washington know that we have been paying attention and that we have had more than enough money stolen from us over the course of the past three years. It is time for action unless you think sticking your head in the sand and allowing yourself to be robbed in plain sight is okay. This country has more than enough resources, including oil, to be self sufficient and to ease the ridiculous price of gas on American consumers. It is time to start worrying about the US of A and there is no credible reason to continue the current course of action and allow our nation to be held hostage by OPEC and the Fed. I will add that environmental concerns are valid and need to be minimized, but in no way should they be allowed to prevent the United States from energy independence. It is time to take back our country and regain our standing. No better place to start than with the ridiculous shenanigans taking place with oil. Sorry OPEC that deal certain members of our government made with you so many years ago….its over, we are sick and tired of being abused for the greed of a few!

Tags: , , , , , ,
0

When Fear Runs Rampant in the Markets

By
Andrew Montero
– August 23, 2011
By KOAT Staff Writer Andrew Montero - With the unmistakable volatility we have seen over the last month or so in the financial markets, I get asked one question over and over again at times like this…as well as throughout the course of the year. What to do with all this volatility? The answer is a multi layered one, because it depends on where you are financially, how close you are to retirement, what kind of income you currently have, and several other factors.
stressed trader

Stressed Wall Street Trader

By KOAT Staff Writer Andrew Montero -

With the unmistakable volatility we have seen over the last month or so in the financial markets, I get asked one question over and over again at times like this…as well as throughout the course of the year. What to do with all this volatility? The answer is a multi layered one, because it depends on where you are financially, how close you are to retirement, what kind of income you currently have, and several other factors.

If I were to offer any advice right now….it would be to remain patient but alert, and search for the companies and stocks you have faith will stay relevant. Once you do that, you can look at this recent bearishness as a clearance sale, with some equities at 30, 40, even 50% off their normal trading range price right now. Times like these are when those who seize opportunity can rake in huge profits. Again, there are several factors which only you as an investor can determine prior to making a move. Generally, the further away you are from retirement, the riskier you can afford to be, that’s not to say invest in some penny stock, but perhaps you can look at a company with a couple of years to go before it really gets back to solid footing.

Flash
Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

Those of you who are closer to retirement age…or in a position where a large sum of cash will be needed soon….say for your child’s college tuition, will definitely need to avoid any sort of depreciating situation that might take some time for recovery. If you have done well with your portfolio, then you hopefully have some gold or silver you bought at lower prices to counter the current situation, and perhaps that’s where you need to focus now, even as gold is continuing to make many investors shake their heads. Silver is ok too but be cautious how you buy it and the quantities which you purchase as you continue to invest. It is much better with the current trends to buy in several tranches than to go all in right now on anything; and commodities are definitely no exception.

The key to profiting in the current market is patience and proper due diligence. While the markets are causing many to sell on unjustifiable fear at times, there is some serious potential risk out there right now. So long as you do your homework, you have a good opportunity at some juicy potential profits in the short term. Many stocks are trading at ridiculous multiples and prices currently, prices they have no business trading at; yet there they are ripe for the picking. As always, do some good research before you make any investment decision, but if you have some investment capital in hand, there are some interesting potential opportunities out there right now.

Tags: , , , ,
4

Sirius XM (NASDAQ:SIRI) Major Synergies Just Starting

By
Andrew Montero
– July 22, 2011
As Sirius XM prepares for the 4th quarter launch of FM 6; the last satellite launch scheduled for several years, it is important to note that the true impact of the merger of Sirius and XM into one company is only recently now truly going to impact the bottom line. The start of major synergy impacts began with the launch of XM 5, which can broadcast both Sirius and XM signals and is the new “spare” satellite for the company. After the launch of FM 6 there will be no satellite launches until 2017 or so at the earliest according to the company. This will begin to impact quarterly revenue in a positive way starting in fiscal Q1 2012 most likely. The launch expenses for FM 6 likely will hit in Q4 this year when the satellite is launched, currently the launch is scheduled for mid October.

By Andy Montero -

As Sirius XM prepares for the 4th quarter launch of FM 6; the last satellite launch scheduled for several years, it is important to note that the true impact of the merger of both Sirius and XM into one company is only recently now truly going to impact the bottom line. The start of major synergy impacts began with the launch of XM 5, which can broadcast both Sirius and XM signals and is the new “spare” satellite for the company.  After the launch of FM 6 there will be no satellite launches until 2017 or so at the earliest according to the company. This will begin to impact quarterly revenue in a positive way starting in fiscal Q1 2012 most likely. The launch expenses for FM 6 likely will hit in Q4 this year when the satellite is launched, currently the launch is scheduled for mid October.

The legacy Sirius infrastructure will remain in operation for several years to ensure legacy equipment is still functioning for subscribers, but eventually the current NGSO satellites will be de-orbited.  Sirius XM will need less satellites going forward, which will mean less expenses and more revenue to the bottom line. In the future it appears Sirius XM will require no more than 3 or 4 satellites to cover North America, which is quite a savings compared to the two separate companies. Additionally, the satellite repeater network will be reduced and the satellite earth stations necessary for operations will likely be reduced. Bear in mind this is Sirius XM synergies for itself only; should Sirius XM and say Dish Network (NASDAQ:DISH) and or DirecTv (NASDAQ:DTV) find some synergies in operations, well then all three companies would experience some benefits and their stock holders would see the results. Additionally, as newer satellites are launched with much more capacity and capability increases Sirius XM can look to existing satellites to expand through 3rd party content distribution lanes.

The merged internet player is also a cost saver as there are not 2 separate internet radio services needed. The sound quality of both the satellite version and internet version of the service is much improved compared to a year or two ago. Sirius XM has held their cards close to the vest and rightfully so after all the difficulties the company has endured. Anticipation for Sirius XM 2.0 is growing and the company needs to present some unexpected capabilities surrounding all the hoopla. Record and replay just won’t cut it in my opinion. Sirius XM may have some information on 2.0 in the upcoming conference call since we are currently in fiscal Q3 and 2.0 is slated for retail release in Q4. Overall, there are some very positive developments for the bottom line on the horizon. The company is still growing and hopefully will ensure it continues to do so even as the economy is still fragile. Sirius XM has plenty of room for more improvements regarding metrics such as churn which we all would like to see reduced some more, and even self pay sub numbers, which I feel as many others must remain constant at a minimum or increase, even if just by a small number. As the Q2 conference call was announced yesterday as August 2nd, it will not be long now to see what kind of performance the company has had thru June 30th. How do you see the results for the 2nd Quarter? Let us know.

 

Disclosure; Long SIRI, no position in DISH or DTV

Tags: , , , , , , , ,
0

Sirius XM and Others Benefitting From Increasing Value of Spectrum Ownership

By
Andrew Montero
– June 28, 2011
Sirius XM Radio purchased spectrum in the 2320 MHz to 2345 MHz range at FCC auction over 12 years ago for $170 million dollars combined and subsequently poured billions of dollars into infrastructure, content and management over the ensuing years. Sirius XM, still a fledgling company as a combined entity, only recently reported their first ever consecutive profitable quarters. Several years after Sirius XM Satellite radio purchased their spectrum licenses and had started building out their infrastructure, the FCC auctioned off another section of spectrum which bookends the spectrum belonging to Sirius and XM in the 2305-2320 MHz and the 2345-2360 MHz ranges

By Andy Montero

Sirius XM Radio purchased spectrum in the 2320 MHz to 2345 MHz range at FCC auction over 12 years ago for $170 million dollars combined and subsequently poured billions of dollars into infrastructure, content and management over the ensuing years. Sirius XM, still a fledgling company as a combined entity, only recently reported their first ever consecutive profitable quarters. Several years after Sirius XM Satellite radio purchased their spectrum licenses and had started building out their infrastructure, the FCC auctioned off another section of spectrum which bookends the spectrum belonging to Sirius and XM in the 2305-2320 MHz and the 2345-2360 MHz ranges.

At the onset of this particular auction, there were rules with regard to this particular segment of spectrum which were quite clear in representing that no interference would be permitted with the Sirius and XM spectrum already being developed and deployed for consumers. The FCC unequivocally made sure it was known that protecting Satellite Radio would make mobile operations in the spectrum that was being auctioned most likely difficult, and worse case technologically unfeasible.

Even with that knowledge companies still submitted their bids for the licenses in the spectrum auction. As a result, the entire purchase price for WCS spectrum that was auctioned in those blocks was only $14 million dollars. This block of spectrum is 5MHz larger than the SDARS spectrum and sold at auction for $154 million less than the SDARS spectrum was sold for in the 1990s. The only plausible explanation for this is due to the restrictions placed on that spectrum at the time of auction. The companies who purchased this spectrum knew ahead of time and purchased it in any event due to growing demand in hopes of being able to utilize it at some point.

Fast forward and more recently the Federal Communications Commission has been loosening restrictions on spectrum in order to minimize the impact of a lack of available spectrum and maximize the usage of existing spectrum. The spectrum held by DBSD and TerreStar, which currently require a satellite component to the service was apparently part of that loosening of restrictions. Rules regarding spectrum use and ownership are being changed. With the loosening of some previous restrictions regarding spectrum use it will make available and owned spectrum more valuable to companies like Liberty, Sirius XM, Intelsat, Dish and Echostar as well as other entities. It is part of a recent strategy by the FCC to enable owners to make more services available through leveraging of limited available spectrum. The agency has been slowly loosening restrictions on Mobile Satellite Spectrum (MSS) since a couple of years ago.

The S-band licenses, which TerreStar and DBSD hold, are among the first to be less restricted. Depending on the final outcome of coming modifications to spectrum usage, each band of spectrum could be worth more than $3 billion.

The move to scoop up spectrum by Dish Networks’ Ergen has been raising eyebrows in the media space. Ergen spoke about spectrum value not long ago, in generic terms. EchoStar paid over $700 million just for wireless licenses alone in a 2008 government auction. Ergen has made several comments similar to these he uttered at a conference call “We think spectrum has value, and then if you can do something with it strategically, it can have more value.” In recent months it has become very apparent that Ergen does not mince words. Dish Networks’ bid for DBSD seems to indicate he’s not just buying spectrum of the cuff to flip it. Dish significantly upped its winning bid from $1 billion to $1.5 billion for DBSD. You would have to believe Ergen plans to do something significant with this acquisition in the near future if he was willing to increase his purchase bid by 50%.

Is Ergen really willing to spend billions to build his own wireless network? Is it possible he might pool the associated licenses in a partnership enterprise with an existing carrier or sell them outright? The licenses that DBSD happens to have ownership stake in cover what the FCC calls mobile satellite spectrum and require a satellite component in their use and operation. Interpret that as you will, but it is no coincidence that  Ergen has been acquiring assets or has bid on assets through Dish Netwrok and Echostar over the course of the last 9 to 12 months specifically and over several years time has also been waiting on regulatory body decision making regarding plans that have been years in the making.

Disclosure: Long SIRI

Tags: , , , ,
« Older Entries