This week Liberty Media (LMCA) is free to increase its stake in Sirius XM (SIRI) above 49.9% without having to tender for all the shares of Sirius XM. Liberty Media currently owns 40% of Sirius. Owning SIRI would provide Liberty with access to SIRI's $7.8 billion of net operating liabilities (NOLs) and its rising free cash flow. However, from where we stand, we see four options for Liberty Media with regard to its ownership stake in Sirius:

1) Acquire the remaining 60% of Sirius. This is unlikely to happen for several reasons. One, acquiring full control of SIRI now will invalidate the full access of SIRI's $7.8 billion of NOLS. They would have to wait another six months, September 2012, to make that type of acquisition in order to gain full access to SIRI's NOLs. Also, the cost should be prohibitive. Liberty would have to pay close to $10

In our last writeup on Sirius XM (SIRI) we showed through valuation analysis that SIRI's shares are worth $3 per share, and that was based on a more aggressive sub estimate than management was guiding to and what the current Street has modeled. Management is guiding for 1.3 million net additions for 2012 and the Street is estimating 1.4 million net additions. We believe that management is low balling the Street on net additions and that net additions may approach 1.6 million. However, even that estimate now looks conservative based on recent SAAR numbers.

We are sticking with our 1.6 million net addition estimate for 2012 but the February SAAR number of 15.1 million was exceptionally strong. The number was up 14% y/y and is the highest since 2008.

If the economy remains robust and that 15 million SAAR handle is maintained throughout the year, then the 2012 net

We think Sirius XM (SIRI) has now eclipsed the notion of being a speculative stock and should join the ranks of the stable stocks in media and technology, including such blue chip companies such as Disney (DIS), Viacom (VIA), Apple (AAPL) and IBM (IBM). Now before the Bears get all riled, we are saying "join the ranks" not "equal to."

SIRI has proven itself to be a stable revenue grower and strong cash flow generator. Further upside to the shares, which has run 20% over the past six months, should be driven by consistent sub growth supported by stable OEM conversion rates and self pay churn of 2%, share repurchases, upside from the used car market, and margin improvement. Those dynamics taken together should drive the shares towards $3 by the end of 2012, barring a macro contraction due to Greece and Europe, rising oil prices, and events out of

By most accounts, Facebook’s IPO should raise $10 billion. What will FBOK do with its part of all that cash? The same thing Google (GOOG) has been doing. Buying up other companies to build up its ecosystem to ensure its longevity as well as assure investors that it is not a one trick pony. Google, several years ago, acquired several companies such as YouTube and DoubleClick and about a hundred more companies. What’s more interesting is that FBOK will force Google, Amazon (AMZN), Apple (AAPL), Microsoft (MSFT) and maybe even Yahoo! (YHOO) to step up their game. And that will mean nothing more than them acquiring other Internet companies.

Here are a few targets for Facebook and for the above named companies for that matter:

• Renren (RENN): The Chinese social networking site makes for an attractive acquisition as it would give FBOK an entry into the fast growing and

Google (GOOG) should report 2Q11 earnings sometime next week. Consensus is calling for revenues of $6.534 billion, up 19% y/y, adjusted EBITDA of $3.560 billion, up 9%vy/y, and pro forma EPS of $7.87, up 22% y/y. Adjusted EBITDA margins of 54.5% is down 500 basis points due to stepped up hiring and investments.

We think EPS should come in slightly above consensus, which would be a positive given the uncertain economic environment as job growth has slowed, the Japan supply chain disruption continues, the end of quantitative easing, debt limit uncertainty, and the possibility that the high yield market could see spreads widen, leading to another credit crisis. Add to that headline risks and distractions from legal disputes, and government investigations.

There is talk in the industry that searches slowed from mid-to-end of June, mostly on travel terms, a trend that could slip into the third quarter, and cause us

Travelzoo’s (TZOO) shares were down sharply yesterday on news that Groupon and Expedia (EXPE) have formed a partnership. We think the move was unwarranted and that the shares could double from here.

We have long thought of TZOO as a public way to play the burgeoning growth of local deals, led by private companies Groupon and LivingSocial, but part of a group of about 400 companies that are now offering local deals of some sort.

The Groupon/Expedia announcement of a discount travel product named Groupon Getaways with Expedia will focus initially on hotels and will allow each company to tap into each other’s customers databases.

We believe that this market can sustain multiple participants and the fact that Expedia has chosen to go this route supports TZOO’s strategy. LivingSocial is already in this market generating near $100 million in travel sales and has had zero impact on TZOO’s business.

TZOO

ValueVision Media (VVTV) is set to report earnings on May 11, 2011. Research firm Piper Jaffray is calling for revenues of $146.7 million, Adjusted EBITDA of ($0.962), and GAAP EPS of ($0.73). We think those estimates are easily beatable and the shares are likely to rally post the earnings.

Friday’s favorable decision from Liberty Interactive regarding the bondholder lawsuit should be viewed as a catalyst for the TV Shopping industry, and VVTV in particular, because it could mean that QVC and HSN would be cleared to merge in the future. Comcast in our view, would not sit idle and let QVC and HSN become overbearing as a combined competitor, and could invest in VVTV to make it more competitive. We think that would ultimately lead to a full acquisition of VVTV by Comcast.

In addition, Comcast’s declaration last week that it would cross promote its assets is also

Valuevision Media (VVTV) shares are down nearly 30% since posting a high of $7.60 in early February, largely due to another offering, which we see did not sit well with investors. We admit that we were caught off guard by the offering, the second in three months, but understand its intention and are moving on beyond it. Investors should too and should accumulate the shares aggressively, as we see the shares increasing 40% in a year. Furthermore, we continue to believe that Comcast (CMCSA) will buy in the company and bolster its position to compete with Liberty Interactive (LINTA) and HSN (HSNI), which could merge.

Word to the wise though: When a company surprisingly issues great guidance, as in the case of Valuevision a few months back, expect some transaction such as a sale or a equity or debt offering.

Before we dive into the fundamentals and

Sirius XM (SIRI) should report 1Q11 earnings likely in the first week of May - no official date announced. Consensus is calling for revenues of $738 million, adjusted EBITDA of $169 million, and GAAP EPS of a penny. Net additions are expected to be 1.44 million, with SAC per gross add of $57 and APRU of $11.57.

We think SIRI will meet/beat these estimates but will be cautious on guidance due to the unexpected impact of the Japan crisis. Guidance is for 2011 net additions of 1.4 million, revenues of $3 billion, and adjusted EBITDA of $715 million. We think they maintain those estimates.

SAAR numbers have been strong during 1Q indicating that subscriber numbers are likely to come in ahead of expectations. The Japan earthquake should not have a negative impact in the first quarter but could have an impact in the subsequent quarters, in our view. Churn

CBS (CBS) was our top large cap media pick for 2010 and we are making it our top large cap media pick again for 2011 due to the strong margin expansion, free cash flow growth profile, and now share repurchases. The shares could increase another 65% this year to $43 based on our multiple analysis, DCF, and sum-of-the-parts valuation.

The media conglomerate is more widely known for its TV Network and TV Stations, which together only comprise slightly above a third of company revenues. CBS actually has a diverse collection of businesses including Radio stations, an outdoor advertising business, a film studio, a publishing business - Simon & Schuster, a thriving Internet business through CNET, CBSSports, and Lastfm, TV production and the resulting syndication business, and pay TV networks Showtime and CBS College Sports.

CBS is benefiting nicely from a strong rebound in advertising dollars and syndication sales tied to

A few months ago we penned an article stating our view that Sirius XM (SIRI) is a relatively expensive stock and we would rather wait for a pullback before buying the shares of what we view as a great company with a solid growth trajectory. The shares now trade at 16x 2011 EBITDA, even with the recent pullback due to the Japanese earthquake and tsunami.

That topic of valuation came up in several investor conferences in which both Sirius XM and Liberty Media (LCAPA) management presented.

In one presentation, Liberty Media's CEO, owner of 40% of SIRI shares, agreed with us that the shares are expensive. Here he is at the Deutsche Bank Media and Telecom conference:

"Look, their stock has had an enormous run. On a current multiple of EBITDA, it is not an inexpensive stock. On the other hand, we have enormous confidence in this business, and

Research in Motion (RIMM) is scheduled to report earnings on March 24, 2011. We had previously been negative on the stock and had successfully shorted it throughout 2010. However, we are now turning positive are buying the shares into earnings. We think the February ending quarter was better than most had expected and that guidance for the May quarter should be better than expected. Baring further geopolitical risks, RIMM shares should appreciate 15-20% between now and after earnings as Street estimates come up.

For the quarter we are estimating revenues of $5.8 billion and EPS of $1.85, which is meaningfully above the consensus of $5.6 billion and EPS of $1.75. Guidance for the May quarter could be conservative but we are expecting revenues of $5.85 billion and EPS of $1.80 versus consensus of $5.6 billion and $1.64.

The key metrics and how they should fare:

Net Adds: We see net

In addition to the factory install opportunity in which nearly half of all vehicles installed with a satellite radio convert into a paying customer, Sirius XM (SIRI) plans to tap the used car market to further drive subscriber growth at a low incremental cost. Given that Sirius XM has already incurred the cost to install the radio in those vehicles, the SAC is insignificant, and growth from this channel should improve overall subscriber economics. The company would still have to incur some cost to market this service to used car owners.

Currently SIRI has entered into agreements with several OEM partners including Volvo, Porsche, Chrysler, GM, Ford, Nissan, and BMW to offer free trail services to the certified used cars. At the moment, we are unsure how the economics work, meaning does the dealership pay for a few months of the service as is typical with the factory install deals,

In January we wrote about the implications of the second anniversary of the Liberty Media (LCAPA) - Sirius XM (SIRI) transaction, seen here. The write-up solicited a wide level of responses from viewers eager to decipher facts from speculation. Liberty’s CEO addressed that very topic on a recent conference call:

“On the Sirius side, just to review, we can buy our way up to 49.9, just under 50 today. At the end of next month, there's a change in the terms and we can make an offer for all the company's stock. We must make it for all the company's stock and go over 50 in an offer for all and in March of 2012 we could bypass the 50. Those are all opportunities that exist. We fundamentally like the direction of the business. We fundamentally have confidence in the business. So we're probably not looking to collar our

Sirius XM (SIRI) reported a mixed 4Q10 earnings result and provided 2011 guidance that missed on all metrics, except subscriber net additions. 4Q10 net subscriber additions of 329K was slightly below the consensus of 330K. Self-pay churn of 1.9% was in-line with consensus, ARPU of $11.80 was below consensus of $11.95, and SAC per gross add of $58 was better than consensus of $61. EBITDA of $144 million was ahead of consensus of $142 million.

2011 revenue guidance of $3.08 billion was below consensus of $3.1 billion, and EBITDA of $715 million was below consensus of $768 million, but subscriber net additions of 1.4 million was meaningfully ahead of the consensus of 1.3 million. Guidance outside of the net adds was unimpressive, but SIRI has a history, we believe, of downplaying expectations.

The drop in OEM conversion to 45% was concerning but SIRI attributed that to OEM mix rather than

eBay (EBAY) hosted an Analyst Day (seen here) last week to present an update on progress and provide new, aggressive, financial targets, almost two years after it presented goals to analysts at the 2009 analyst day. The tone of the meeting was upbeat and the shares increased over 7% during the presentation on promises to stabilize the ailing marketplace business and robust financial forecasts for the PayPal unit. In fact, eBay expects 20% growth for PayPal and high single to low double digit growth rates for the marketplace segment.

(click to enlarge)

The financial targets provided for 2013 at Analyst Day:

• $13B - $15B in total revenues (+15% CAGR)
• $7B - $8B revenues from the marketplace business with 38% - 42% segment margin
• $6B - $7B revenues from PayPal with 24% - 26% segment margin
• $7.5B - $8.5B in free cash flow generation over the next three

Netflix's (NFLX) shares have outperformed every major TMT stock over the past two years except Liberty Capital (LCAPA) and Sirius XM (SIRI). The shares are riding a secular wave of viewership shifting to digital, physical DVD rental store closings, a high penetration of its service on devices such as Xbox, PlayStation, and the Wii, and availability of its streaming service on new digital devices like the iPad. Further, competition for its "subscription-based' service has been non-existent to date, and management has been remarkably successful at entering into content deals with studios looking for additional ways to monetize their content.

Traffic trends to the site remain strong according to most of the Internet tracking services, and the streaming service continues to resonate well with consumers. The company is now expanding overseas, likely in Europe, where the field continues to be wide open, even with Amazon's (AMZN) presence.

The cost structure is

Sirius XM (SIRI) has had a remarkable run over the past year, increasing 121% versus a 30% appreciation in the S&P 500. The shares now sport a market cap of $11 billion and trades at an EV/EBITDA multiple of 17x 2011 Street estimates, near three times the multiple ranges of other subscriber based media companies.

For example, Dish Network (DISH) trades at 6.0x 2011 EBITDA, DirecTV (DTV) at 4.0x, Time Warner Cable at 6.4x, Cablevision at 6.5x, and Comcast at 5.8x (not factoring the recent NBCU acquisition).

As for the large cap media companies, who themselves have exposure to subscribers, CBS (CBS) trades at 7.5x, Disney (DIS) at 9.5x, Time Warner (TWC) even with the recent run following the spectacular earnings report at 7.7x, Newcorp, a great company but with a depressed 5.0x multiple, and the pure play cable networks Discovery (DISCK) and Scripps (SNI) at around 10-11x.

Netflix (NFLX)

Once on the verge of bankruptcy, Sirius XM (SIRI) was given a lifeline by Liberty Media (LCAPA), who provided liquidity via $530 million in loans and preferred stock, convertible into 40% of Sirius stock -- effectively giving Liberty Media 40% equity in the company and the right to appoint 40% of Sirius' board seats.

That deal, which closed on March 6, 2009, came with three main restrictions.

1. Hedging restrictions: Liberty Media could not engage in hedging activities prior to 12/31/2009.
2. Standstill restrictions: Until the second anniversary of the close of the Phase II investment (on 03/06/11), neither Liberty Media nor affiliates may acquire beneficial ownership in SIRI that would result in >49.9% ownership without the approval of the SIRI board. From the second to third anniversaries of the close, Liberty Media may not acquire any beneficial ownership >49.9% unless it is pursuant to an offer for all outstanding