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Has Jim Cramer Crossed the Line with Sirius XM?

by: Brandon Matthews August 28, 2008 | about stocks: SIRI    

Brandon Matthews

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As expected, on the heels of three separate positive analysts’ reports this week that included Citigroup (C), Stifel Nicholas and Barrington Research, Jim Cramer has come out again to bash Sirius XM (SIRI) and its shareholders.

In this latest attack, Jim may have finally opened himself up to a lawsuit, as he outright lies in some of his assertions, which I will explain. You can’t get sued for an opinion, but you can get not only sued but prosecuted for spreading false rumors about a company, which in my opinion, is just what Jim Cramer has done. Let’s highlight this statement of Jim Cramer:

However, more important, this quarter is a disaster for Sirius as is the next one because the deal came too late to salvage the Christmas retail selling season and the fall auto season. Missed ‘em both. Brutal.

When breaking this down, we can easily find all the flaws and fear mongering of this statement.  He claims this quarter will be a disaster for the company. In a way, that may hold true, as there will probably be merger related costs that cut into Sirius XM earnings. That is, of course, only if the synergies announced do not materialize in time, and we can see that cost cutting continues to be a priority of the merged company.

His next claim that approval came too late to salvage the Christmas selling season could not be farther from the truth. Besides the company already announcing that new radios will be in stores by Christmas, there is also the open access provision mandated by the merger which allows just about anyone to enter the retail satellite radio market with their own branded offerings. This will not only increase retail subscribers but will also result in lower costs as Sirius XM will not subsidize these radios.

His most outlandish claim, and the one that may end with Jim Cramer in a courtroom, is the outright lie that Sirius XM has somehow “missed” the 2009 OEM model year. The fact is that the companies are continuing to operate separately as XM and Sirius regarding the automotive channel. Nothing has changed. OEM installation rates of SDARS have continued to increase. There has been no slowdown in this regard nor will there be. In fact, the target remains at 70% penetration for the 2009 model year. The OEM’s benefit from these installs and as such are doing whatever they can to increase their unit profits.

Should new radios be introduced, manufacturers will conduct a “running change.” This occurs frequently in the manufacturing process when parts changes occur due to such things as component problems or supply issues. A worse case scenario would mean that 4″ wiring harness adapter would be needed to install a different radio than the one already prepared for, and wiring harnesses with a new radio connection would then be used to make the process seamless.

Of course, Jim also had to rehash the refinancing issues of next year, completely ignoring Merrill Lynch’s assessment that at most the dilutive results of complete refinancing in a poor credit market would only result in 17% dilution as a worse case scenario. Again, he fails to mention that Merrill Lynch’s Jessica Reif Cowen says this is very unlikely, and instead operates under his own agenda. For instance, 17% from $1.35 is $1.12, yet Jim insists the stock would go below a dollar. He also seems to overlook S&P’s recent upgrade.

At this point, it is clear that Jim Cramer intends to cause substantial harm to Sirius XM and its shareholders. The proof being that the company has offered guidance following Labor Day. Yet, Jim insists on doing whatever he can, including lying to bash the stock lower before the company’s conference call, which, of course, he again fails to mention, to drive the price lower.

In addition, despite Mel’s interview with Cramer acknowledging that there will be no reverse split, Cramer again comes out and makes a case for it. I would bet that right now, Sirius XM attorneys are preparing the paperwork necessary to bring Jim Cramer to justice.

Position: Long SIRI, Short Jim Cramer

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This article has 114 comments:

  •  
    Aug 28 07:24 AM
    i wish they would sue and get him off the air,cramer's power of being able to move a stock with his show is sad.

    maybe siri should offer him a channel and pay him what he is really worth. lets say a lotto ticket a week.
    Reply
  •  
    Aug 28 07:44 AM
    Cramer needs more attention. What better place to get it than the most searched stock SIRI. Cramer should be sued not only for SIRI but many other stocks he recommended at the wrong time to buy or just at all. He pumped SIRI right to the end then dumped. He has no more credibility. Your done Cramer. Off the TIVO season pass manager.
    Reply
  •  
    Aug 28 07:46 AM
    I am long SIRI.
    Reply
  •  
    Aug 28 07:51 AM
    Sirius has a CNBC channel. I am pretty sure that they regularly broadcase Cramer's show. Sirius must not have Jim on the payroll like Goldman does.
    Reply
  •  
    Aug 28 08:11 AM
    Hit Cramer where he lives, stop clicking on all related links that he is benefiting from you reading whether you like it or not. He is the only winner when you read his site and CNBC can get all the complaints in the world on him and all they will think is GOOD, he is getting attention. So silently ignore him, yes including the writers, stop ranting on his comments and let him fade like the festering boil on the backside of investing that he and his company is. OK, time to practice the above, do not reply to this, you can do it.
    Reply
  •  
    Aug 28 08:14 AM
    You are only giving credence to Cramer's babbling by writing this great criticism. As I have told others, Dr Phil is not a real doctor, Judge Judy isn't a judge, and Cramer is not a money manager. These people are all paid to entertain us. Being the class clown is not grounds for a lawsuit, unfortunately.
    Reply
  •  
    Aug 28 08:30 AM
    This author is posting here positive articles about SIRI almost daily!

    It's not Cramer selling SIRI stock at $1.33.




    Reply
  •  
    Aug 28 08:30 AM
    i hope he gets sued. he is hurting siri and a lot of small time shareholders who can ill afford any more loss with his bashing.
    Reply
  •  
    Aug 28 08:32 AM
    i am long sirius
    Reply
  •  
    Aug 28 08:33 AM
    Gordon, you obviously dont know the law. If Cramer is proven to have lied, he is sueable under slander laws(liable), i forget which one is the spoken word. The other is for the written word, which since his shoes get copied to hard print, his quotes, etc.. he might be sueable under both offenses. He pumped and dumped this stock. He is trying to give the people a reason to sue him, not Goldman or the other banks for non disclosure of possible investment risks. Also for the huge nake interest this stock had. If the SEC was really craking down on naked short selling why ignore the #1 culprit?
    Cramers constant bashing of this stock just proves it value, actually. I kind of find it amusing. But I do feel for the margin people or the peopel who are stupid enough to buy high(only when Cramer will ever recommend a stock) and sell low. He makes a ton of money for his people, so sue who pays him, and him as well. Probably wouldnt be too hard to follow the money trail. This stock will be at 10 dollars some day, minimum. Of course Wall Street wants you to sell. Thats THEIR money, not yours. Wall Street was invented to take YOUR money and make it THEIR money. You can win if you do the opposite of what THEY say to do. Just be careful, because sometimes they know this. But in this case, with how this stock played out, the merger, etc... Its very unlikely that Cramer is actually looking out for your best interests. No one on Wall Street gives a Rats behind about you, or your portfolio. JUst keep buying high and selling low, so the banks can get back into the green.
    Reply
  •  
    Aug 28 08:37 AM
    I agree 100%, he's hurt many people in a number of stocks. He killed me with NYX as I'm sure many others, such conviction in 07 and now he's bashing the co. In the case of NYX, he went on about how it was his #1 pick and he wouldn't give up on it, yet from what I could see, on his site that he charges people for, he was telling them to average down, then he dumped it, and now is bashing it telling everyone NYSE is done. Every exchange out there is having a tough time, yes the NYSE has it's issues with market share and cost cuts, and I'm sure they're working on it, but come on, to get everyone into this stock for free on his CNBC show, and than not give the same info on the way out for FREE, is a bad policy, why should I have to pay to know he's thinking of dumping it, if I didn't have to pay to hear him pitch it. In the end, I understand it's every individuals responsibility to manage their own portforlio, but I'm sure many people thought, as I did, this guy is very knowledgeable and would not steer us in the wrong direction, so much for that. I'd like to know what the percentage of his viewers actually make money with his picks?
    Reply
  •  
    Aug 28 08:37 AM
    Actually, Cramer is not hurting this stock ONE BIT. Just individuals dumb enough to listen to him. The stock will move when whoever is DAILY AND CONSTANTLY REshorthing this stock are done doing that. When they feel enough shares have transferred hands from the weak and ignorant , to the smart and informed, it will go up, and not a day before regardless of buying interest. The shorts need to close, and as of Aug. 15th, 100 million shares have closed out. From 300 to 200, and im sure its going lower. Charts say its bottomed, its action says it bottomed, the timing on announcments say its bottomed, it just need to keep that range till enough shares have transferred hands. Keep your shares, it wont be going anywhere near $1. My only prove of that I need is Cramer saying it will, to know that it wont. I predict his show either is cancelled within one year, or the economy is so bad no one notices him anymore.
    Reply
  •  
    Aug 28 08:43 AM
    CRACKHEAD Cramer is just that! He is correct less than 45% of the time and yes, a lot of people do just as he says unfortunately. I believe that he is only trying to move stock prices to help out his wealthy friends......and himself! I can still remember when he was pushing the crap out of CHTR when it was above $4.70.......then it went down to less than a buck. I wonder how much he and his friends made shorting CHTR! He is worthless and does have aggendas. I hope SIRI/XM sues the SH!T out of him!
    Reply
  •  
    Aug 28 08:44 AM
    If i was an attorney my settlement would be, Cramer can no longer be on television,radio,newsp... or internet. Not, to mention the 1 billion or so he would have to cough up that cost this company. SIRIously!
    Reply
  •  
    Aug 28 08:47 AM
    For all of the talk about giving Cramer a break, it is clear that he is digging his own hole to crawl in to. He could have been neutral and waited for the next couple of quarters to play out, but instead he takes an aggressive leadership role in bashing the stock and with it, the investors he talked into buying. Even the “Converts” he said that are a better deal are not available, unless you buy Goldman’s worthless 2-1/2% paper due in Feb. 09.

    At Schaeffer’s Investment Research site, the amount of “short” interest, charted over the last month, since Cramer’s flip flop and Winkes new SP target, go hand in hand. The comparison is dramatic. Comments by Cramer tied to shorting activity are a direct correlation. Short interest way up, Cramer bashing way up, stock price down. Nice job Cramer and the shorts.

    I am a long and hope that Cramer is dealt with in the court of law for his outrageous positions on this stock and company over the last year.
    Reply
  •  
    Aug 28 08:56 AM
    DON'T CLICK HIS LINKS! He laughs every time we read his article. Notice how a very large numbr of stories mentions SIRI, but when you read the article it actually has very little to do with SIRI. Every media tries to find a way to link their story to SIRI so that we will open it and read it. Don't open his stories.
    Reply
  •  
    Aug 28 09:14 AM
    Be a bit more practical. Law suits just continue to make attorneys wealthy.
    I think you're giving Cramer more attention and credit than he deserves. In fact, some of my friends and I use an anti-Cramer strategy.
    For example, on 8/21 he recommended WMT over TGT. As you might expect, WMT bumped up from $58.50 to close Friday at $59.44. Up 94 cents (+ 1.61%) on the day. Yesterday, one week later, WMT is at $59.29 - up only 21 cents (+1.35%) from a week ago.
    On the same day, he recommended dumping TGT for WMT. TGT was at $51.06 yet closed Friday at $52.66 - up $1.60. (+3.13%). And, as of yesterday's close - $52.85 up $1.79 (+3.51%).
    Let's face it; Jim can't control what's going to happen. More often than you think, being a Cramer Contrarian is the better play.
    Reply
  •  
    Aug 28 09:16 AM
    I think Cramer means well and he's fun and entertaining. He's human and as such is subject to error. You could start your own show, but if you were right 100% of the time it wouldn't be as entertaining as his.
    Reply
  •  
    Aug 28 09:17 AM
    It is time Madman Cramer's program goes off the air. He is so full of hot air about stock potentials and no doubt has influenced a lot of investors who have no doubt lost lots of their hard earned money.
    Reply
  •  
    Aug 28 09:27 AM
    Cramer has zero credibility. Cramer is just another Dan Dorfman. Cramer practices the fine art of manipulation.


    Reply
  •  
    Aug 28 09:30 AM
    The author demonstrates his profound ignorance of the law. There is no liability here based on what Cramer said. Even if he did, General Electric would be the target of the suit, not Cramer personally. You can bet GE's corporate lawyers protect him well. This article is impotent rage masquerading as righteous indignation.
    Reply
  •  
    Aug 28 09:33 AM
    Relmor makes alot of sense here, keep your shares buy low and sell high, not a brainer, Institutions love to get your shares on the cheap. Bottom line is earnings. everything else is just BS.

    SIRIUS XM is a great company with fantastic management, give them time, all this attention must tell you something.
    Reply
  •  
    Aug 28 09:35 AM
    Not so, Ari d k. It;s not earnings but also capital structure. This company has tremendous debt and a boatload of convertibles that will dilute the common even more if the company becomes even modestly profitable. It's why the common is a lost cause.

    The smart money has moved on -- but the dogs on these message boards are still barking about its "upside".
    Reply
  •  
    Aug 28 09:38 AM
    Toyota just announced this morning that it's backledaling its sales forecast for all of 2009 to fewer than 10 million vehicles. Do you think this is a harbinger of robust sales for Sirius? Those who do are in for a big disappointment, not to mention a loss.
    Reply
  •  
    Aug 28 09:42 AM
    SIRI will go up today at least!
    Reply
  •  
    Aug 28 09:47 AM
    Guess what, a little birdy told me all new cars sold in this country starting with the 2009 models will have Sirius XM radios installed a standard feature
    Reply
  •  
    Aug 28 09:50 AM
    How many times have you seen Cramer say Buy Buy Buy on a stock that has already run 20 to 30 percent. He is a Broker on T/V giving stock buying advise. I have had five different stock accounts and five different advisers at one time and they would not be able to come up with something to buy every day. How can Cramer. You will loose money.
    Reply
  •  
    Aug 28 09:57 AM
    art d k: So how many cash-strapped consumers will pay $12 a month for it? Gas is $4/gallon plus, home equity is maxed out, values are falling, and the credit tourniquet is tightening. The math makes no sense.
    Reply
  •  
    Aug 28 09:57 AM
    All those cars also have airbags -- but how many of them actually get used?
    Reply
  •  
    Aug 28 10:08 AM
    All you desperate longs should sell now, take your money, buy a CD and make yourselves whole again.
    Reply
  •  
    Aug 28 10:11 AM
    Jim Cramer has been right on the mark when it comes to SIRI and XM. It just happens to be contrary to many of the hopeful shareholders of the company. Some people just don't want to hear negatives about their stock, even though it's the truth. THANKS FOR KEEPING ME CLEAR OF SIRIUS on the way down JIM CRAMER. Too bad others didn't follow your advice.
    Reply
  •  
    Aug 28 10:17 AM
    I'm no Cramer fan, but, I see nothing but opinion in his comments. I also did some checking and it seems to me that the person writing this post seems to be writing pro-SIRUS statements on a regular basis. I guess being LONG explains that. The statements in this post could actually cause Cramer to sue the poster. If you are looking for a short term return this stock is not for you.
    Reply
  •  
    Aug 28 10:18 AM
    Wow!!! Justice would be a refreshing change! All that I care about is that a person in Brandon's (article's author) position or in Cramer's position is objective. Cramer has repeatedly praised then bashed, praised then bashed Sirius XM over the years to the point that you have to wonder who he is trying to move this stock for!

    I wish that the FBI would get a wiretap on Cramer and start collecting information to fry him. He is not a good person and deserves to be trated as such.
    Reply
  •  
    Aug 28 10:22 AM
    Have you ever wonder that when times are bad, people look for escape. That is why people will not give up low cost SatRad. Its not the end of the world, people are addicted to pleasure in life, rather give up other needs than wants in life when the cost is minimal like SatRad.
    Reply
  •  
    Aug 28 10:32 AM
    Friend 12...

    Apparently your research skills are lacking as I have written many scathing articles regarding Sirius. I resent your accusations as they are false.
    Reply
  •  
    Aug 28 10:39 AM
    Cramer seems shady and mean spirited at times. He is influential and should be investigated. CNBC should make sure he is absolutely clean. I suggest they ask him to take a polygraph test by independent unbiased professional. If he refuses they should let him go. He is in a position where he can effect many individuals' lives, so CNBC or GE needs to make sure his ethics, motives, and behaviour is absolutely clean.
    Reply
  •  
    Aug 28 11:07 AM
    Hey Pask, you are a moron. Cramer told people to dump the stock after it went down, not before.
    Reply
  •  
    Aug 28 11:15 AM
    vicar

    you must be a lonely person.. you seem to be on this blog to get attention. If you hate this stock so much, why are you spending so much time bashing it... do you even own this stock???
    Reply
  •  
    Aug 28 11:18 AM
    Jim Cramer is a hack, but blaming him for the performance of this stock is pointless and really ignorant. There is absolutely no way one individual can manipulate a stock this way. He hasn't done this stock any favors, but he's not solely responsible for it's lack-luster performance. If you want to lay blame, you need to include many more people, including stockholders. Stock price is simply an issue of supply and demand (regardless of critics, analysts, or financial reports). Too many people got on this band wagon before the FCC ruled. The company makes a good product, it will survive.

    Quit arguing about Cramer and giving him the attention that he doesn't desire, issue a OTC stop limit with your broker on an amount that you are comfortable with and stop watching the stock.
    Reply
  •  
    Aug 28 11:21 AM
    Does anyone remember Tokyo Joe? Tokyo Joe was prosecuted for basically doing the same thing that Cramer does, giving his predictions and opinions of stocks, including informing his followers of his buy/sell moves. The only difference between Tokyo Joe and Cramer is that Cramer is on TV and Joe was just, well...a "regular joe" just like the rest of us. I guess it's just all about who you know with the SEC. The SEC needs to curtail "all" of these individuals and groups who's very words can move stocks significantly, even though those words are typically nothing more than personal opinions...not facts. Motley Fool is another one that needs to be seriously investigated, they have a constant pattern of picking a favorite stock and then bashing all others that compete in the same space. (Motley Fool would always bash SIRI in favor of XM (because they had a large position in XM)...no matter what the truth was!) It's plain 'ole stock manipulation....period...
    Reply
  •  
    Aug 28 11:31 AM
    SIRI shareholders still cant blame themselves for their stupid investment.
    Paying $500,000,000.00 for someone to fart over the radio ???
    "Investing" in it was/ is/ and will be stupid.
    Reply
  •  
    Aug 28 11:37 AM
    If any of you have noticed, the "MAD MONEY" show doesn't perform as well in poor economic conditions as well as it did when the economy was sailing along. Many of Cramer's
    "educated" prognostications simply fall flat these day's, and he has resorted to CEO interviews, and very partisan patronizing or advertising for the benefit of the various companies he favors that moment. I think the public is finally catching on, and it is affecting his shows ratings.