Analysts Mixed After Karmazin Conference Call
November 11, 2008 at 5:26 AM (PT)
MEL KARMAZIN's conference call MONDAY discussing SIRIUS XM's financial situation after third quarter 2008 (NET NEWS 11/10) was met with mixed reactions from analysts, who noted the CEO's reassurances on the refinancing of the company's massive debt, but suggested that further measures are required to move the company forward.
On the call, KARMAZIN, whose company took a large writedown of almost $5 billion based on the diminution of the company's stock, called the company's performance "impressive," considering the macroeconomic environment. He also voiced optimism about the company's ability to refinance some $210 million in debt due in FEBRUARY and other liabilities that add up to about $1 billion for the whole year. "The tone of the conference call seemed to provide some needed, if inconclusive, reassurance on the near-term debt refinancing," STANDARD & POOR'S analyst TUNA AMOBI told BUSINESS WEEK after the call.
While KARMAZIN said the company's higher-end packages are selling well, EDISON MEDIA RESEARCH Pres. LARRY ROSIN suggested that subscribers may yet tighten their belts and cut back on satellite radio. "They are a very, very discretionary expense," said ROSIN. "Families are cutting their expenses. It seems doubtless they'll lose some people that way."
KARMAZIN touted the company's cost cutting, including the elimination of 22% of its workforce, as an example of savings resulting from the SIRIUS-XM merger. However, AMOBI said, more drastic measures may be called for. "They are probably going to go deeper," said AMOBI.