How can you respond in absolutes?
No, I've just produced and read enough financial presentations to recognize that there is no sinister meaning in the paragraph you mentioned. I'm not sure what you THINK it means?
As for financial analysis, let's look at the $5.8 million in revenue for the quarter and compare it to $114 of losses. Subs must grow approximately 20x, while costs remain unchanged (to break even on cash flow). Meanwhile $450 million of debt must be serviced.
Well, costs WILL largely remain unchanged. Depreciation, interest expense, cost of programming -- all stays about the same. As to the 20x, that isn't far off -- XM's original projections were the 4M subs would be required for break even (although, the previously projected 3M for cash flow break even has been modified downward). $450M in debt is not an unmanageable problem.
This venture may eventually succeed, but likely not until financial restructuring that wipes out common shares.
This just isn't a fact. So long as the business has the ability to borrow money, and I believe they do as of today, the problem is manageable.
My expectation is that we'll see some form of funding come through in the next week or two. Hopefully, it will be non-dilutive debt, given the stock price. However, when I purchased this stock I knew I would see dilution prior to its becoming a cash cow, which is precisely where it will end up.
My question for you: What is it about XM at this point in time that comes as a surprise to you? To date, this company is precisely where it was expected to be. The only thing that isn't right is the artificially depressed stock price, which is no different from almost everything else in my portfolio.
The company's subscription projections and financing requirements are precisely on target with projections from a couple years ago. |
