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Merrill Lynch analyst Jessica Reif Cohen issued a critical report on Sirius XM Radio (SIRI) Monday. The media analyst notes that auto sales for 2008 and even 2009 appear to be troubling for satellite radio as the OEM channel has been an integral part of the growth of satellite radio.

Cohen has lowered her projections on subscribers, noting,

1) September’s broad decline in U.S. retail (lowest in 3 years);

2) soft electronics sales with Best Buy (BBY) posting -2% September comp;

3) ML lowered U.S. auto forecast for ‘08/’09 to 13.8mn/12.5mn vs. current SIRI guidance of 14mn; and

4) credit crisis has made SIRI ’09 refinancing prohibitive.

The analyst lowered net adds by 47k to 409k, which represents a down 51% year over year comparison. She has also adjusted ARPU to $10.47 from $10.53, and has trimmed revenue by $7mn to $611mn (+15.4% year over year).

Cohen feels that dilution is likely as SIRI uses equity to save the balance sheet. Jessica notes,

Given illiquidity of the high yield and levered loan market, SIRI CEO Mel Karmazin has been obligated to use SIRI equity through debt swaps to take out pending maturities. The primary benefit is the extension of optionality to the extent a restructuring (i.e. bankruptcy) is averted, however, it comes at the cost of dilution.

Cohen maintains an Underperform rating and has lowered her price target to $0.25. Cohen has joined other analysts who now see weak auto sales as another hurdle for satellite radio to negotiate. Between low auto sales and a credit market than can only be described as terrible, she and other analysts see real challenges for the company. Should the company be successful in renegotiating their debt, and should auto sales turn around, then, and perhaps only then, will the analysts on the Street sing a new tune.

With Sirius XM Radio due to announce their Q3 numbers soon, it will be interesting to see not only the reaction of the Street, but of analysts as well.

Position - Long SIRI

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  • upgrade to best of and go out and buy stilettos for everyone you know........
    2008 Nov 04 08:34 AM Reply
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  • Why are they even commenting on a penny stock?
    Why are you STILL writing about it?
    Answer: Attention Whores
    2008 Nov 04 09:08 AM Reply
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  • It'sAJoke

    I bet that by the end of today that comment will start an enormous argument....

    lol
    2008 Nov 04 09:14 AM Reply
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  • I sold the rest of my shares, screw this stock, nothing but bads news
    2008 Nov 04 09:53 AM Reply
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  • SIRIUS Shareholders File Suit Against SIRIUS XM Radio Management
    LOS ANGELES, Nov. 3 /PRNewswire/ -- The following is being issued by
    "Save Sirius":
    A group of incensed shareholders, over 500 strong and growing, have
    banned together and accused SIRIUS XM management of unjustly enriching
    themselves at the expense of shareholders.
    A derivative suit on behalf of shareholders has been filed in the
    United States District Court, Central District of California, Southern
    Division. Case number SACV08-00790CJC
    The case accuses management of violations of the FEDERAL RACKETEER
    INFLUENCED AND CORRUPT ORGANIZATIONS ACT (RICO), BREACH OF THE FIDUCIARY
    DUTY AND THE SHERMAN ACT.
    This suit seeks to prevent management from further damaging its
    shareholders with massive amounts of additional dilution (8 billion shares
    in the fully diluted float) and as much as a 1 for 50 reverse stock split.
    "We are working to gain control of our company by seeking to remove
    current members of the board as well as top executive Mel Karmazin," said
    Michael Hartleib on behalf of Save Sirius and its members. In a September
    15th 2008 Wall Street Journal article written by Sarah McBride, she states,
    "Given Sirius XM's low stock price, Mr. Karmazin said he would love to take
    the company private. But given the state of the credit markets, 'How do you
    find [the money] today?' If the company were generating positive cash flow,
    which he expects it to do for the full year in 2009, privatization would
    become much more feasible, he says."
    It is clear that management under Mr. Karmazin's leadership has an
    agenda to steal this company from its shareholders.
    Given Management's history of:
    -- Locking their shareholders into the longest merger delay in history;
    -- Preventing the Corporation from seeking alternatives or potential
    suitors;
    -- Failing to commercially introduce interoperable radios;
    -- Their insistence on going forward with the merger at any and all costs;
    -- Consummating the merger issuing 300 million shares to the financiers of
    XM's debt to be sold short on the open market
    Mr. Karmazin and the board have severely damaged shareholder value in
    violation of their fiduciary duties. Shareholders have lost over 90% of
    their value under Mr. Karmazin's leadership.
    "In light of the aforementioned, it is clear that they have lost sight
    of their obligations to shareholders and have breached and will continue to
    breach their fiduciary duties in the future. We, as a group, will not stand
    for this and will use any means possible to prevent and preclude them from
    stealing this company from its rightful owners -- we the shareholders,"
    said Michael Hartleib, on behalf of Save Sirius and its members.
    Contact:
    Michael Hartleib
    2008 Nov 04 11:03 AM Reply
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  • If all the high profile talent on Siri took a 50% pay cut for a year or two , it would generate 100M per year ..........maybe not enough to ever get Siri to profit , but I bet it would get the stock close to 2 bucks easily in no time

    and if Siri did that , I would run buy a satrad , and I would be AGAINST the lawsuit ............but as it is now , I am going to get screwed anyway , so I will NEVER own satrad , and as far as I'm concerned , I hope Siri gets raked through the coals in court

    And my beef is not related to any conspiracy theories , I know full well many things have been out of Siri's control this past 2 years .......but it is obvious to me that Siri has continually spent our money irresponsibly , and lived a Cadillac life , on a Hyundai budget with OUR MONEY

    Siri is typical of what is wrong in this country , and why we as a nation are having so many problems ........A few at the top are paying themselves incredible amounts of money , EVEN when the company FAILS ..................what a racket ................CAPITA... is ALL about motivation ................Where'... the capitalism when you get paid the same , whether you succeed or fail ????? That is NOT capitalism , THAT , is the OTHER side of communism .....USA sanctioned Communism ( you can bet your ass it is )

    I am shure46 , and I approve this message !!!!!!
    2008 Nov 04 12:14 PM Reply
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  • Where's RELMOR,

    You used to say that when we were at our darkest hour and when the analyst were against us that it was time to buy...............

    It's getting pretty dark.................
    2008 Nov 04 12:30 PM Reply
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  • The news is no surprise about automakers losing business. The next step is to sell advertising ads to offset the decrease. Will Mel do this? Sure, after the company becomes private. I have been an investor for years and I finally am throwing in the towel. This stock is going to continue to fall while the rest of the market recovers. Not only will investors lose more of their money in SIRI, they will also lose money that could have been made in other successful companies rebounding. Thanks Mel. Goodnight and Goodbye.
    2008 Nov 04 01:34 PM Reply
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  • Ya, its almost time to buy. Wait a few days. I need more sell ratings on this stock to be completely convinced of any serious turn around.
    I am for this lawsuit. Its a good thing. It keeps management honest. Its wonderful news for all stockholders. Dont treat my shares like garbarge it tells them.
    2008 Nov 04 02:35 PM Reply
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  • I may be tempted to buy on the 10th if it hasnt gone lower than .30 cents by then.
    2008 Nov 04 02:36 PM Reply
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  • Im buying again soon to Relmor. .30 was looking good today. The amount I would by moves my average to 1.17. Thats not an unreasonable target in a year. May stick it out until the 10th with you
    2008 Nov 04 03:14 PM Reply
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  • Good Luck guys..................... I'm in at .24, .23, .22, and .21,...............,,,... but, ........... may have to adjust up............ will see. ...killer.
    2008 Nov 04 03:42 PM Reply
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  • This is obvious. With GM near bankruptcy, its not hard to figure out the more the auto industry suffers the more SIRI will. Sentiment for SIRI is so bearish (www.predictwallstreet....) Im suprised were even still in double digits. I know SatRad is the last thing on my X-mas list.
    2008 Nov 04 04:43 PM Reply
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  • For what it's worth I am still in at buy lots of .2233, .2163, and .2055 to execute the plan that I spoke of 1-1/2 weeks ago. I'm hoping to come out with a 78% increase in shares from where I sold. If the stock doesn't move into the .20's this week I might reconsider, but level ll shows someone is providing buoyancy to this stock at just over .30. If they pull the plug, the stock will go down. There doesn't seem to be the same interest to take the stock in the other direction right now.

    killerkaul..

    The prop 10 vote is happening in California tonight so I took a position for 500 shares in CLNE this morning...... it was at 8.25 when I got in..... I'm playing as a trade and if prop 10 passes will hold it to the end of the week.... we'll see what happens
    2008 Nov 04 05:05 PM Reply
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  • How in the hell can a stock trade 68 million shares and end the day at 0, no movement for the day. I find this impossible . It has to go up or down, no way can it stay at the same price as the day before. Explain this to me.
    2008 Nov 04 05:27 PM Reply
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  • Lets take a pill until next week........then we will see if the sun comes up over the East or perhaps its going Nova!

    Here's what I think. Times are tough and Mels going to talk about that but there will be a debt payment surprise. Siri will announce some good news on that front. It must be good news and they know it. They have been really busting gut on this topic. Restructuring, cost savings, etc, they know what they have to do.
    2008 Nov 04 07:27 PM Reply
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  • For Mel and Company.........went looking for a home portal kit this past weekend at Radio Shack, BB, and CC. BB had the best inventory, Radio Shack the worst. CC had dust on most of the stuff. Part of the problem is I have a ST2. Nothing in the stores for that. I ended up with a 12V 1.5amp charger from Radio Shack and an XM antenna from the back room at BB. Took me 3 hours to get this stuff so I could scare the heck out ot kids with channel 113 on Halloween. So cool to have it anyway, going to take my card board box with speakers, etc to Tahoe in two weeks, good music in the room! Ps. these retailers need help understanding the products and someone needs to put pressure on them to buy product for resale. I do not see any push in the stores this way and its November! What is going on Mel?
    2008 Nov 04 07:34 PM Reply
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  • justice for all,

    I thought the same thing today. I watched 5 other stocks to day in what you and I might call "normal" trading. The price trends one way or the other for a time, gains speed on volume, retraces a bit, drops. NORMAL. Now this one for 80% of the last three days seems like someone wants to keep it AT .30, .31, .32. Who makes the market? One trade today was 800,000 dollars and the price did not move. I hate to say I don't have answers. I am asking what can be behind $20mm in trades and the share price does not move?


    On Nov 04 05:27 PM justice for all wrote:

    > How in the hell can a stock trade 68 million shares and end the day
    > at 0, no movement for the day. I find this impossible . It has to
    > go up or down, no way can it stay at the same price as the day before.
    > Explain this to me.
    2008 Nov 04 09:12 PM Reply
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  • This is the same discussion as last month, the month before, etc. Take my advice, sell while you still have some money. When subscriber numbers are released this month, the price will drop below .20. Might be a good time to get back in then, but now is nothing but downhill. Look at the sales released by Radio Shack, Best Buy, etc. People are not buying products for a company they think will go bankrupt
    2008 Nov 04 09:58 PM Reply
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  • if any sirius/xm shareholders want to join our fight please email michael hartleib at savesirius@gmail.com and he will send you info on how to join the fight
    2008 Nov 05 02:20 AM Reply
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