Sirius: Great Earnings, Horrible Timing
Sirius earnings met or beat estimates in every category. More importantly, Sirius did what it said it was going to do. I am an ethicist...management credibility goes along way with me.
Of course, nothing is perfect, and indeed there were a few possible flaws, i.e., as pointed out by (the perennially negative) Jonathan Jacoby at Bank of America, some of the subs counted were unsold Chrysler inventory (this was fully disclosed by Sirius), and as Goldman Sachs mentioned, capex is going to increase in 2008 due to a satellite launch (although Goldman neglected to include additional revenues as a result of this increased bandwith). Sirius even waited a few days after the XMSR release so that it wouldn't risk being tainted by their lowered expectations as it had been in recent quarters.
But alas, just after the Sirius conference call, Ford and Chrysler had some less than rosy news regarding sales comps and production, and Apple came along and said they were further infiltrating the OEM market. These developments may have come as news to you and me, but not to Sirius management. They know how the auto makers are selling, and they know what other technology companies are up to.
I guarantee you that management took these items into consideration when they reiterated their 2006 and 2007 goals, and therein lies the opportunity for investors. 8/04/2006 07:30:00 AM
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