Sirius XM Radio Inc (SIRI.O) posted higher quarterly revenue on Thursday, despite a reduction in subscribers, and raised its income outlook, citing cost cuts and a potential rebound in automobile sales.
The company, which earlier this year secured financing from John Malone's Liberty Media Corp (LINTA.O) (LCAPA.O) (LMDIA.O) to stave off looming debt problems, said subscribers to the pay-radio service declined by some 186,000 from the first quarter, better than many analyst expectations.
Shares of Sirius XM, which had risen sharply in the days ahead of the report, slipped 9 percent after it reported that it ended the period at 18.4 million. It attributed the quarterly decline to weakness in auto industry sales.
Proforma revenue rose 1 percent to $607.8 million, on par with analysts' views. The proforma figures reflect the fact that Sirius completed its purchase of rival XM Satellite Radio last July and compare the results as if they were a single company a year ago, also making some accounting adjustments for the transaction.
Net loss attributable to common shareholders for Sirius XM, home to programs by Howard Stern and Oprah Winfrey as well as Major League Baseball, was $157.3 million or 4 cents a share.
Excluding special items the loss was was 1 cent a share, matching analysts estimates, according to Reuters Estimates.
In the quarter, Sirius also trimmed subscriber acquisition costs to $57 per gross subscriber addition from $71 in the year ago quarter.
It raised its 2009 outlook for adjusted income from operations to more than $400 million, fueled by accelerated cost cutting. It was the second time it lifted the forecast, after raising it in May to $350 million from $300 million.
"We think the stronger subs performance, as well as better-than-expected profitability, in the quarter, suggests this number should be attainable," J.P. Morgan analyst Lev Polinsky said in a note to clients.
The outlook improvement comes as more subscribers to Sirius, which gains most of its new users from radios built into cars, sign up for premium programming packages and on higher prices for users with multiple subscriptions.
American International Group's (NYSE:AIG - News) newly named CEO, Robert H. Benmosche, has lots of experience making deals and overseeing complex organizations. He's going to need it. Benmosche's selection lands him in one of the hottest seats in business, as AIG struggles to gain its footing after its near-bankruptcy and government rescue last fall.
Industry observers give Benmosche (pronounced ben-mo-SHAY) high marks for his tenure as CEO at MetLife (NYSE:MET - News) from 1998 to 2006. "There are very few financial-services executives with insurance background that have his experience and track record," says M. Evan Lindsay, vice-chairman of recruiter Heidrick & Struggles (NasdaqGS:HSII - News). He did "an extremely good job at Metropolitan" and "changed it into a performance-based culture," Lindsay says. (Heidrick was not involved in the AIG search.)
Benmosche, 65, will succeed Edward Liddy, the former head of Allstate (NYSE:ALL - News) who came out of retirement to run AIG in September for a salary of $1 a year. In a statement, AIG said Benmosche will take over from Liddy on Aug. 10. Despite this act of public service, Liddy became a lightning rod for congressional critics and others over AIG's pay practices. The federal government has a nearly 80% stake in AIG. Benmosche won't come so cheap. According to The Wall Street Journal, his compensation package will total $7 million to $10 million -- a salary that must be approved by Kenneth Feinberg, the government's new pay czar, and could trigger more political fireworks. AIG consulted with government officials about Benmosche's selection, the Journal reported, citing a person familiar with the situation. It's not clear if federal officials have agreed to the compensation. But, Lindsay notes, "that is market (rate) for anyone in this position."
Financial Discipline
While at MetLife, Benmosche oversaw the insurer's conversion from a mutual company to a public corporation. He also orchestrated several major deals, including the $11.5 billion acquisition of Travelers Life & Annuity from Citigroup (NYSE:C - News) in 2005. He "instilled a lot of financial discipline" at MetLife and led a "seamless integration" of acquired businesses, says Andrew Edelsberg, an insurance industry analyst at A.M. Best. Before MetLife, Benmosche was an executive at Paine Webber -- now part of UBS (NYSE:UBS - News) -- and when that firm acquired Kidder Peabody in 1994, Benmosche oversaw the combining of the brokerage firms' operations. This experience makes him "a good choice" to lead AIG, Edelsberg says.
Whether Benmosche will be building AIG's business or dismantling it remains to be seen. The onetime industry goliath remains deeply wounded. On Aug. 3, Moody's Investors Service (NYSE:MCO - News) downgraded two AIG lending units to near junk status. Saddled by its massive IOU to U.S. taxpayers and battered in its operations by competitors taking advantage of its weakness, AIG had appeared headed for effective liquidation. But, says Marc Steinberg, another A.M. Best analyst, that's not a foregone conclusion. "There are a lot of different strategies they could take," he says. In the statement issued by AIG, Benmosche says: "With my AIG colleagues, we will focus on this mission: maximizing the value of the company's assets and meeting all of our stakeholder obligations."
Casino mogul Stanley Ho, the father of Macau's fabled gambling industry, has been hospitalized and had surgery in Hong Kong, his office said Tuesday.
The brief statement did not say what surgical procedure the 87-year-old billionaire underwent.
"He is in satisfactory condition and is progressing well in recovery," the statement said.
The confirmation of Ho's hospitalization came after Hong Kong media reported Tuesday different medical reasons for his stay at Hong Kong Adventist Hospital.
Pictures from Hong Kong's Apple Daily newspaper showed a stream of Ho's family members, including daughter Pansy and son Lawrence, visiting the hospital Monday. None of them commented on Ho's health.
Ming Pao Daily cited Angela Leong, one of the four women Ho calls his "wives," as saying last week that he needed treatment because of a rectal injury that he suffered two years ago following a procedure to relieve constipation.
Apple Daily newspaper, meanwhile, cited an unidentified source as saying that Ho had fallen and hit his head last week at Leong's home and that he required brain surgery. The report said he is in stable condition in Adventist Hospital's intensive care unit.
Leong did not immediately return calls from The Associated Press seeking comment. The hospital also declined comment.
Uncertainty over Ho's health sent shares of his company Sociedade de Jogos de Macau Holdings, or SJM, 4.5 percent lower at HK$3.15 on the Hong Kong Stock Exchange.
Ho, worth more than $9 billion according to Forbes, presided over Macau's casinos for four decades until his monopoly was broken up in 2002.
Since then, he has faced fierce competition from American operators such as Wynn Resorts Ltd. and Las Vegas Sands Corp., but SJM still leads with nearly 30 percent of the local gambling market.
Macau is the only place in China where casinos are legal.
Citigroup shares continued their march higher Wednesday, closing above the $3 mark in heavy trading.
Three trading days after the completion of an exchange offer in which the company swapped new common stock for preferred securities, Citi announced in a release that Wednesday would be the settlement date for the public exchange offers.
It is also the recording date for determining holders of common stock that are entitled to vote on the company's common proxy statement, which includes a proposal to issue as many as 60 billion shares, up from 15 billion. The increase to the standing authorization to issue shares is designed to give the company room to maneuver above its current number of shares outstanding. Citi's total shares outstanding were expected to jump to as much as 23 billion from the completion of the exchange vs. 5.5 billion at June 30.
Citi's stock closed up 8.4% to $3.22 with more than one billion shares changing hands in Wednesday's regular session. The stock's three-month average trading volume is 291.4 million.
The exchange offer, announced in February, swapped roughly $58 billion worth of preferred shares and trust preferred securities for common stock. The private and public offerings included a total of $25 billion preferred securities owned by the U.S. government. The exchange transaction has made the government Citi's largest stakeholder, holding roughly 34% of the company's shares.
Analysts and investors will now be focused on how long it will take before Citi can get out from under the government's grasp. Other big financial firms including Goldman Sachs, Morgan Stanley and JPMorgan Chase were able to repurchase their preferred stakes during the second quarter.
Unfortunately Citi's businesses are still struggling -- and more so than its large bank counterparts. The company's attempts to reshape itself during the worst financial crisis since the Great Depression through a deleveraging of risk, expense cuts, restructuring of core businesses and management changes, has taken a toll on its revenue. Citi has a large consumer loan book that remains troubled. It also keeps fidgeting with its executive management team and board of directors to add more commercial banking experience. Most recently the company added, including the former superintendent of the New York State Banking Department.
Shares of common stock to be issued in the public exchange offers will be delivered to the voting trust Wednesday and then delivered to the Depository Trust Company on Thursday to be issued to participants, the company also said. Additionally, shares of common stock that were issued in the public exchange offers will be "subject to an irrevocable proxy issued by the voting trustee in favor of all of the matters covered by the common proxy statement."
There's something about the idea of doubling one's money on an investment that intrigues most investors. It's a badge of honor dragged out at cocktail parties, a promise made by over-zealous advisors, and a headline that frequents the cover of some of the most popular personal finance magazines. Where this fixation comes from is anyone's guess.
Perhaps it comes from deep in our investor psychology; that risk-taking part of us that loves the quick buck. Or maybe it's simply the aesthetic side of us that prefers round numbers - saying your "up 97%" doesn't quite roll off the tongue like "I doubled my money." Whatever the source though, it is both a realistic goal that investors should always be moving towards, as well as something that can lure many people into impulsive investing mistakes. Knowing some of the most trusted avenues to doubling your money is something that all investors should have in their toolboxes.
The Classic Way - Earn It Slowly Investors who have been around for a while will remember the classic Smith Barney commercial from the 1980s, where British actor John Houseman informs viewers in his unmistakable accent that they "make money the old fashioned way – they earn it." When it comes to the most traditional way of doubling your money, that commercial's not too far from reality.
Perhaps the most tested way to double your money over a reasonable amount of time is too invest in a solid, speculative portfolio that's diversified between blue-chip stocks and investment grade bonds. While that portfolio won't double in a year, it almost surely will eventually, thanks to the old rule of 72.
The rule of 72 is a famous shortcut for calculating how long it will take for an investment to double, if its growth compounds on itself. According to the rule of 72, you divide your expected annual rate of return into 72, and that tells you how many years it takes you to double your money.
Considering that large blue-chip stocks have returned roughly 10% over the last 100 years, and investment grade bonds have returned roughly 6%, a portfolio that is divided evenly between the two should return about 8%. Dividing that expected return (8%) into 72, gives a portfolio that should double every nine years. That's not to shabby, when you consider that it will quadruple after eighteen years, and octuple (8 times) after 27.
The Contrarian Way – Blood in the Streets Even straight-laced, even-keeled investors know that there comes a time where you've got to buy. Not because everyone is getting in on a good thing, but rather, because everyone is getting out. Just like great athletes go through slumps when many fans turn their backs, the stock prices of otherwise great companies occasionally go through slumps because fickle investors head for the hills.
As Baron Rothschild (and Sir John Templeton) once said, smart investors "buy when there is blood in the streets, even if the blood is their own." Of course, these famous financiers weren't arguing that you buy garbage, at any price. Rather, they were arguing that there would most surely be times where good investments become oversold, which presents a buying opportunity for brave investors who have done their homework.
Perhaps the most classic barometers used to gauge when a stock may be oversold, is the price-to-earnings ratio and the book value for a company. Both of these measures have fairly well established historical norms for both the broad markets and for specific industries. When companies slip well below these historical averages for superficial or systemic reasons, smart investors will smell an opportunity to double their money.
The Safe Way Just like how the fast lane and the slow lane on the freeway eventually lead to the same place, there are both quick and slow ways to double one's money. So for those investors who are afraid of wrapping their portfolio around a telephone pole, bonds may provide a significantly less precarious journey to the same destination.
But investors taking less risk by using bonds don't have to give up their dreams of one day proudly bragging around the lunchroom about doubling their money. In fact, zero-coupon bonds (including classic U.S. Savings Bonds), can keep you in the "double your money" discussion.
For the uninitiated, zero-coupon bonds may sound intimidating. In reality, they're surprisingly simple to understand. Instead of purchasing a bond that rewards you with a regular interest payment, you buy a bond at a discount to its eventual maturity amount. For example, instead of paying $1,000 for a $1,000 bond that pays 5% per year, an investor might buy that same $1,000 for $500. As it moves closer and closer to maturity, its value slowly climbs until the bondholder is eventually repaid the face amount.
One hidden benefit that many zero-coupon bondholders love is the absence of reinvestment risk. With standard coupon bonds, there's the ongoing challenge of reinvesting the interest payments when they're received. With zero coupon bonds, which simply "accrete" or grow towards maturity, there's no hassle of trying to invest smaller interest rate payments or risk of falling interest rates.
The Speculative Way While slow and steady might work for some investors, others may find themselves falling asleep at the wheel. They crave more excitement in their portfolio and are willing to take bigger risks to earn bigger payoffs. For these folks, the fastest ways to super-size the nest egg may be the use of options, margin or penny stocks.
Stock options, such as simple puts and calls, can be used to speculate on any company's stock going up or down. For many investors, especially those who have their finger on the pulse of a specific industry, options can turbo-charge their performance. Considering that each stock option potentially represents 100 shares of stock, a company's price might only need to increase a small percentage for an investor to hit one out of the park. Be careful and be sure to do your homework; options can take away wealth just as quickly as they create it.
For those who want don't want to learn the ins and outs of options, but do want to leverage their faith (or doubt) about a certain stock, there's the option of buying on margin or selling a stock short. Both of these methods allow investors to essentially borrow money from a brokerage house to buy or sell more shares than they actually have, which in turn, can raise their potential profits substantially. Again, this method is not for the faint-hearted, since margin calls can back your available cash into a corner, and short-selling can theoretically can generate infinite losses.
Lastly, extreme bargain hunting can quickly turn your pennies into dollars. Whether you decide to roll the dice on the numerous former blue-chip companies that are now selling for less than a dollar, or you sink a few thousand dollars into the next big thing, penny stocks can double your money in a single trading day. Just remember, whether a company is selling for a dollar or a few pennies, its price reflects the fact that other investors don't see any value in paying more than that price.
The Best Way to Double Your Money While it's not nearly as fun as watching your favorite stock on the evening news, the undisputed heavyweight champ of doubling your money is that matching contribution you receive in your employer's retirement plan. It's not sexy and won't wow the neighbors at your next block party, but getting an automatic 50 cents to $1 for every dollar you deposit is tough to beat.
Making it even better is the fact that the money going into your 401(k) or other employer-sponsored retirement plan comes right off the top of what your employer reports to the IRS. For most Americans, that means that each dollar invested really only costs them 65-75 cents out of their pockets. In other words, for every 75 cents, most Americans are willing to forgo out of their paychecks, they'll have $1.50 or more added to their retirement nest egg – not too shabby! Before you start complaining about how your employer doesn't have a 401(k) or how your company has cut their contribution because of the economy, don't forget that the government also "matches" some portion of the retirement contributions of taxpayers earning less than a certain amount. The Credit for Qualified Retirement Savings Contribution reduces your tax bill by 10-50% of what ever you contribute to a variety of retirement accounts (from 401(k)s to Roth IRAs).
If It's Too Good to Be True… There's an old saying that if "something is too good to be true, then it probably is." That's sage advice when it comes to doubling your money, considering that there are probably far more investment scams out there than sure things. While there certainly are other ways to approach doubling your money than the ones mentioned so far, always be suspicious when you're promised results. Whether it's your broker, your brother-in-law or a late night infomercial, take the time to make sure that someone is not using you to double their money.
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