SIRI has recapitalized, got rid of it's debt and is funded to breakeven (if they execute their plan) in 05. I listened to the conference call, and doubled down at 74 cents.
siriusradio.com
At that price the stock trades at a market cap of 777m, but 530 of it is cash (assumes $1 wts are exercised), so a mere 247 EV. To give you an idea of the upside, IF they captured 10 million subs by say 06, that's 800m free cash flow. Put a 10 multiple on and that's a 8 billion market cap.
Their problem is lack of execution relative to XMSR (350K subs vs 30K at YE).Everybody expects plug and play like the Delphi to be about 35% of sales, and SIRI won't have their's out until 2Q,03, although they claim it will be the product of choice when ready. SIRI has 43% of the new auto OEM market. It is increasingly clear that the auto companies are really behind these products.
XMSR is ahead a good year on execution, has a bit more of the OEM market so far. SIRI may now pick up more OEM backing as the financing means they survive. XMSR now needs to do a major financing though, as they have 226 cash, but 515 debt. The EV is a bit higher at 540m, than SIRI's 247m reflecting their progress. I think the financing for XMSR is doable as they have great corporate backers like Clearchannel, GM and Honda. SIRI was really backed by vultures: Blackstone Group, Lehman Brothers, who extracted a lot of flesh (diluted old shareholders on this deal. |
