SiriusBuzz

In a press release issued today, Directed Electronics, Inc. (Nasdaq: DEIX) announced that the company has amended certain terms and extended its manufacturing and distribution agreement with SIRIUS Satellite Radio, Inc. through January 31, 2009.

James E. Minarik, President and Chief Executive Officer of Directed, said, “Together with SIRIUS, over the past three years, we have achieved the #1 position in aftermarket satellite radio sales, and are once again pleased to extend our relationship. By extending the contract from August 31, 2008 into 2009, we have the opportunity to generate significant sales of SIRIUS branded products this year, given that roughly 50% of our 2007 satellite radio sales occurred in the fourth quarter. We also look forward to what we hope will be the final approval of the SIRIUS/XM merger in the very near future, which we expect to improve retail consumer demand.”

The amendment also contains certain provisions that further reduce Directed’s exposure to satellite radio product warranty costs.

Mr. Minarik continued, “In the third quarter of 2007, our earnings were adversely impacted by a $4.3 million increase to our warranty expense principally related to our satellite radio business. With this new amendment, the risk of unexpected satellite radio warranty expense is expected to decrease significantly, while concurrently improving our ability to provide superior service to our satellite radio customers. Cumulatively, we believe these changes will lead to improved financial results for this business.”

The extension gives Directed some security through the 2008 holiday selling season. Should the merger pass, and Directed be tasked with developing an A-La-Carte radio, it could represent a boost in retail sales for Directed. Directed stock has traded in the $2 per share range in recent months.

Position - Long Sirius, Long XM

Sirius and XM Satellite Radio each announced today that the companies are deferring their respective annual meetings. The satellite radio companies which are in the midst of a proposed merger both indicated that they will announce new meeting dates when they have more information from the FCC on the merger.

The Sirius and XM meetings were scheduled for May 20th and May 23rd respectively.

The U.S. Department of Justice informed SIRIUS and XM that it ended its investigation into the pending merger, that it has concluded that the merger is not anti-competitive, and that it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval for the pending merger in November 2007. The pending merger is still subject, among other conditions, to approval of the Federal Communications Commission.

Position - Long Sirius, Long XM

In our April 21 article titled Satellie Radio Retail Trends Improve In March there was an error in some of the year over year comparisons due to improper input on a data spreadsheet. While the errors were not large, we wanted to make the correct notations.

Please note the following corrections. The opriginal article has also been corrected.

The NPD data for March will likely be viewed in a positive light by the street as well as analysts, as the trend has improved substantially over the past three months. January’s NPD showed sector down 40%. February NPD had an improvement although sector sales were still down 17%. Now in March, sector sales are down 14% 11%. For Sirius the drop in year over year was only 8.7% 3%. This represents 31 consecutive months that NPD has shown Sirius to have a larger retail share than XM.

Sirius - Down 3% UP 3%
XMSR - Up 23%
Sector - Up 6% 10%

We apologize for any inconvienience. The errors modified Sirius and sector year over year comparisons.

Position - Long Sirius, Long XM

Satellite radio garners a lot of subscriptions from the automobile (OEM) channel. In fact, for the past several months, the weaker retail channel has had SDARS sector watchers relying quite heavily on cars equipped with satellite radio as a saving grace for subscriber numbers. Headlines that GM is cutting back production on trucks and SUV’s may send some people following Sirius and XM into worry mode.

Two years ago, what is happening at GM would have been very bad news. It was at that point that it was the GM truck and SUV line that made up the bulk of satellite radio installations for XM Satellite Radio. Today, while the news is not good, the impact can be better absorbed. The reason is that GM is now installing XM receivers across more vehicle lines than they were in 2006. The overall penetration is also deeper.

The GM news states that the layoff’s and production cuts will mean 88,000 fewer pick-ups and 50,000 fewer SUV’s. This means a total of 138,000 less vehicles. If we assume a 75% penetration in the pick-up/SUV segment, then 103,500 fewer XM equipped vehicles will roll off the lines this year. Of that 103,500 about 55,000 were destined to become self paying subscribers. The deeper penetration across more model lines will easilly absorb these types of numbers.

Yes, it does slow down growth. However, it does not represent doom and gloom. Car sales have been down for most auto makers this year. Production cuts are happening. Penetration is also getting deeper though, so the impact will not be felt to the extent that some may anticipate. Specific to the XM, with regard to the GM issue, this is a Q4 and Q3 impact.

Another thing to consider is that the chipsets are still available for GM to install. This means that they may well utilize these radios anyway. XM is a revenue generation deal for GM, and if the chipsets are already there, they might as well conduct the installations. With the types of numbers and the time frame we are talking about, the overall installation number may not change.

It is often easy to assume that bad news such as GM’s translates through to the related SDARS partner. Investors need to remember that the chipset orders run well ahead of production, and GM is still installing radios into the vehicles that will continue to be produced. The point to remember is that the OEM channel is still growing, and partners such as GM that share in the revenue gain nothing by letting SDARS receivers sit.

In my opinion, the OEM woes have potential to spill into SDARS if the sales lull is prolonged, but the ramp up that is happening is helping to soften the blows. Cars will still come SDARS equipped, and consumers will still become self paying subscribers. Watch the OEM channel, but measure the news carefully.

Position - Long Sirius, Long XM, No Position GM

George Reed Dellinger, of Washington Analysis, who early on predict DOJ approval of the merger, and who watches activity in Washington noted that Friday Chairman Martin of the FCC has made some comments to reporters relating to the pending merger of Sirius and XM. Comments attributed to the FCC Chairman say that he is seeking a consensus 5-0 vote on the proposed satellite radio marriage.

We noted a few weeks ago on our Sirius Buzz Radio show “It Comes Down To the FCC” (available for download) that a simple 3-2 majority in favor of the merger would deliver the least amount of concessions, and that a 5-0 vote would mean more negotiations between the members of the commission, and thus perhaps more stringent conditions as well as additional delay. In essence, there could be a price to pay (concessions) for getting to a unanimous decision. The George Reed-Dellinger report confirms the hypothesis that we published a few weeks ago.

With Washington, one never knows the motives of what transpires behind closed doors, or in the minds of the commissioners. Martin could be genuinely seeking a consensus vote, or simply posturing in order to bring out the depth of the concessions that the dissentor(s) are seeking. Ultimately, it appears that FCC approval will happen, but for investors and the companies, it is a question of what the “cost” will be in terms of conditions placed on the ability to merge.

Reed-Dellinger notes that, “on the surface this implies the deal could be subjected to a lengthy, contentious debate over conditions, such as giving back spectrum or leasing channels, which the Democratic Commissioners may be expected to demand in return for their vote.”

However, the analyst also feels that Chairman Martin, “in our opinion, is merely mouthing the typical words encouraging collegiality, and will not sacrifice the deal, and the ‘a la carte’ pricing scheme offered by management, in order to get a 5-0 vote. In light of the strongly-worded approval by the Department of Justice, such a consensus is likely not needed to keep the appellate court from blocking the merger. Moreover, the DOJ went out of its way to praise the combination’s ‘synergies’, which should reinforce the Republican Commissioner’s goals of not saddling approval with unnecessary conditions.”

George Reed Dellinger remains of the opinion that the deal will be approved without burdensome conditions, on a 3-2 vote if need be, and that while the May 1 date of the Sirius and XM agreement will need to be extended, that approval should come within the next month.

Position - Long Sirius, Long XM

When someone does something with a passion it shows. That passion is easy to fall in love with, and easy to support when times are good. When the economy falters, and people and businesses need to make ends meet, it gets harder and harder for them to support the talents and passions of others. In times such as these, those that have the talent and desire to continue their calling need to reach deeper within themselves. In times like these they also need to extend their reach and seek out those simply looking to make a difference in some way.

Pro Stock Car racing is very regional. Pro Stock racers are often seen as a step below the “big time” of the Busch and NASCAR circuit. Pro Stock drivers tend to have more localized sponsors, and in point of fact are often digging into their own pockets to make their race dreams a reality, as well as entertain racing fans. It is from the ranks of Pro Stock that many racers make their mark and get to the next level.

In Pro Stock, you can see and feel the passion that the racers and crews have. These people do not do it for the money, they do it for the sport. Entire pit crews volunteer their time money and efforts to not only get a car ready to race, but to be differentiators in the pits on race day. This is where the racing we see on television is born. This is where the future drivers and pit crews in Busch and NASCAR come from.

Mike Brightman is a local Stock Car Driver racing for BGB Racing LLC. I had the pleasure of seeing mike this weekend at a family friendly fund drive to get the season rolling in high gear. An event such as this shows the dedication that friends, family, and local sponsors have for this sport and one of its drivers, Mike Brightman.

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We have all heard of Slacker at this point, but how many have actually given it a try? If you haven’t, you are missing out plain and simple. Slacker makes radio listening easy, and better yet, lets you customize stations or simply build your own. No organizing play lists, no going crazy trying to do download after download. Simply pick a station and listen. There are dozens upon dozens of stations to choose from, and they can get pretty specific. Want to win a Slacker portable? Keep reading.

Are you a Rush fan? I am. Check out Rush Radio on Slacker. Rush Radio plays the best music from Queen, Styx, Queensrÿche, Asia, Kansas, Boston, Jethro Tull, Blue Öyster Cult, Meat Loaf, Heart and more. Oh, and yes, it plays all of the tunes from Rush as well. A fan of another band? There is likely a customized Slacker station that has a channel dedicated to them.

Slacker is filling a niche that satellite radio has left out. Highly selectable and easy to use tunes at your fingertips. Satellite could take this step, but at this point neither Sirius or XM have chosen to do so. Why is satellite not making more of an online presence?

Slacker is interactive. Album Art is displayed. You can rate songs as favorites, ban songs, and even download a song instantly if you are a premium service member. Even without the premium service the highly selective nature of radio stations is a service that bests most anything out there. If you are hearing a song, you can learn what album it is from, and even see a write-up about the artist. If you get to a song that you don’t like, you can ban it from the station (this does not ban the song from everyone, just you). If banning seems harsh, simply click the fast forward button and the next great tune will play.

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Sirius satellite radio appears to be serious about the latest S50 update. Last weekend I got an automated phone call from Sirius telling me that I needed to do the update, and this week I got a large card in the mail once again stating the importance of the update.

The communications stress that is important to do this update in order to avoid disruption of service. Knowing that the S50 is in my wife’s car, I guess it really would be prudent to get the update completed.

A Sirius web page explains the steps of the update in detail.

You must download and install this new S50 update to maintain uninterrupted service.

SIRIUS Satellite Radio is making improvements to our broadcast systems. In order to maintain uninterrupted service, you must download and install the latest update to your S50. Installing the updates will not affect your loved songs or recorded talk programs. Follow the instructions below to download and install the updates. You must have a PC operating under either Windows 2000 or Windows XP to update your S50 using My SIRIUS Studio™.

If you have a Windows operating system that is not compatible with My SIRIUS Studio™, such as Vista, please refer to our alternative updating instructions located here. SIRIUS S50 is not compatible with Mac operating systems.

Important!

Before You Begin make sure the battery is installed in the S50 and it is fully charged. If the battery is not installed, or is only partially charged, the software updates may not install properly.

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Sirius Buzz Radio airs each Thursday night at 10:30 PM Eastern time. Shows are live and we invite callers to participate. If you miss the live show, you can always catch up with the events by logging onto our archived shows at www.blogtalkradio.com/sirius-buzz-radio. You can simply listen or download the shows.

Because we are seeing positive response to the shows, we are increasing the time on air from 45 minutes to 1 hour. If you have not listened yet, please visit the site and listen to the shows. Sirius Buzz radio gives topical information, and takes questions from callers.

If you like the show, pass the word, mark Sirius Buzz Radio as a favorite, rate the shows, and leave your comments. If you have a suggestion for a show topic please forward it to tyler@siriusbuzz.com. Lastly, we would like to appeal to you the reader and listener for some help.

If you have the ability to create cool bumpers to open and close the show please feel free to submit them. If they are good they will be put on the air. Simply drop me an email.

The next show is Thursday May 1, 2008 at 10:30 PM Eastern.

Position - Long Sirius, XM

Slacker is stepping up in their efforts to attract new subscribers. Their latest effort is a free shipping offer on any Slacker portable device. The Slacker service lets consumers choose between a 15 channel, 25 channel, or 40 channel device. The portables are customizable, and listeners can build their own radio stations that play songs that the user enjoys. The portable device then allows you to take your music with you on the go.

Slacker makes radio listening and customization easy. Lean more at SlackerActive