Sirius (SIRI) told the world how things would look at the company after its proposed merger with XM Satellite (XMSR). The world greeted the forecast with scorn.
The company called the savings synergies, an overused word. SIRI guessed that it would have "total synergies, net of the costs to achieve such synergies, for the combined company are expected to be approximately $400 million in 2009." It went on further to day The new firm is expected to achieve positive free cash flow, before satellite capital expenditures, for the full year 2009.
SIRI left out the most important part of its guessing–revenue. With out that as part of the equation given to Wall St., the forecasts are merely speculation. No one will buy them without numbers covering the top line.
Both Sirius and XM are down sharply after they released the information. That may be because skeptics think the satellite radio business has seen its best days. It gets most of its new business from car sales, which are doing as poorly has they have in two decades. And, many consumers want an Apple (AAPL) iPod or a music phone from one of the handset companies.The need for satellite radio is disappearing.
The projection are probably false because the revenue needed to make the numbers won’t be there.
Douglas A. McIntyre
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.