Sirius Valuation
April 4, 2006
In an article published by Forbes.com analyst Robert Peck of Bear Stearns comments that current valuation of Sirius Satellite Radio, currently trading near 52 week lows, could have some upside potential.
The key element that Peck notices revolves around one major factor. Will investors begin to look at Sirius’ execution in the path towards Cash Flow Break Even. Peck noted “Sirius’ “unflinching focus on achieving profitability…..” The entire article can be read
HERE (Via Forbes).
Satellite Standard Group (SSG) has noted that there has been a distinct shift in the conference calls by Sirius Satellite Radio. CEO Mel Karmazin often stresses the “laser like focus” he has when it comes to reaching Cash Flow Break Even and profitability. Karmazin also seems to stress the metrics that can illustrate that path.
SSG sees the first quarter, and annual meeting reporting as key moments in 2006 for Sirius Satellite Radio. Analysts and investors alike will be looking at the financials and guidance of Sirius closely to see if that flicker at the end of the tunnel is indeed the light of Cash Flow Break Even.
An important item to note is that Sirius has stated the possibility of CFBE in the fourth quarter of 2006. Included in that projection are capital expenditures which are currently budgeted at $110,000,000. This differs materially from the CFBE projection of Sirius’ competitor XM Satellite Radio, which is projecting Q4 CFBE but excludes capital expenditures from the formula.
The sentiment in the sector has been going through some changes. In the past investors seemed to concentrate heavily on the subscriber numbers, subscriber growth, content deals and automobile deals. As potential CFBE nears, the investor focus seems to have shifted somewhat to the financial standing and profitability potential of Sirius and XM. In our opinion, the sector could see possible upside as evidence of CFBE and profitability becomes more clear.
SSG is not a Financial Advisor and readers should understand that this write up contains opinions. SSG encourages people to seek the advice of a Certified Financial Planner if they are considering investments.The link for this write up is:
http://tinyurl.com/g3xru4/04/2006 09:38:00 AM
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