As a good investor, one has to look at the positives as well as the negatives of any given company that they are interested in investing in. As most of you probably know, I am bullish on SIRI and I do think the long term future is bright and that the merger will only speed up the road to success for these two companies. I am, however, able to see a few issues that will have to be dealt with by the combined company debt, institutional holdings, CapEx, naked short selling, retail sales.

1) Debt: The combined company now has a total of 3.4 billion dollars in debt. This does not concern me nearly as much as the fact that 1.1 billion of that is due next year. Mel has come out and said that they expect $400 Million in expected synergies, and $300 million in free cash flow, but that is before capital expenditures. Even so, $300 million does not come close to paying off that $1.1 billion. That leaves at least another $800 million dollars that will need to be refinanced. What are the credit markets going to be like next year? Will the $300 million in FCF prove the value of SIRIUS XM Radio and allow them to get acceptable terms? We will have to wait and see.

2) Institutional Holdings: Many people cannot figure out for the life of them why the stock keeps dropping. All of these synergies and the PPS is still going down? One item that I have been cautioning people about for a VERY long time (but no one seems to acknowledge) is the fact that institutions are limited on the number of shares that they can purchase OR hold. I am not simply talking about not being able to buy a stock under $5 or $3 or what ever number.

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Todays Mad Money appearance by Mel Karmazin may be the single most important interview for every Sirius Xm investor, ever. As the bottom was again tested at 1.32 on Friday, this was a must win for Mel Karmazin.  I must say that in my opinion, Mel delivered and delivered in a big way. Mel began by assaulting Jim Cramer on behalf of all SIRIUS XM investors, by throwing an object of some sort at him! Boo-Yah, Skee-Daddy!

Mel was able to set Jim straight on many things, such as next years converts which Jim tried to claim were due this year. Mel also took a shot at Goldman Sachs, citing potential wrongdoing on the part of Wienkes, regarding his work with hedge funds.

He explained in layman’s terms that promotions regarding the best of packages, namely Howard Stern on XM would be available this fall, and investors should look for a large marketing push to this effect. Regrettably, Mel outlined that some terminations have already taken place and that more would be forthcoming.

As for greater visibility, he stressed that SIRIUS XM would be providing an investors conference call following Labor Day, to outline the future plans and update guidance. Mel seems laser focused on profitability.

One of my favorite parts was getting Jim to concede that he liked no other company in the sector better. I was thinking about this yesterday while watching the Olympic men’s relay team steal the gold medal away from France. What if you could only buy and sell stocks every four years? Sirius, in my opinion would certainly have to be one of them.

The stock reacted nicely and is well off its technical bottom. Is this the beginning of the long awaited reversal? Time will tell, but for the moment it’s looking like it very well may be!

[Watch The Interview]

Position - Long SIRI

Tune in at 1:30p ET Monday, As Cramer goes head to head with Mel, live during market hours.

I don’t want to build too much hype. I just know I don’t want to hear anything about 300 million in positive EBIDA before capex (capital expenditures).

UPDATE:

Like him or not, it is prudent to know what Cramer is saying about an equity if you are invested in it. will Cramer now become a supporter of the SIRIUS XM Radio? Tune in Monday to find out.

[ CNBC ]

Mel Karmazin recently described himself as an operator. The man has brought many ventures to profitability and beyond, and he is the CEO of the newly merged SIRIUS XM Radio. One thing about Mel Karmazin is that he is steadfast in obtaining goals once he publicly states what they are. He has proven time and time again that he will accomplish the things he sets out to do. He is a business man that is tough to be across the table from, but a joy when he is on your side.

With the merger between Sirius and XM, a new company has been born. Karmazin takes the helm and has set a course for certain goals. $400 million in synergies, strong cash flow, and ultimately profitability. Given his track record, it is pretty much a foregone conclusion that he will get there. Those that want to know how this will be accomplished may find disappointment in the level of detail given thus far, but a bit of waiting has potential to pay dividends.

As a stand alone, Sirius Q2 was good. Metrics seemed to scale across the board, and perhaps one of the more impressive lines was how well costs were controlled despite a much higher royalty rate. While the merger will still deliver costs in the short term, the potential going forward is substantial. Investors and analysts may not be given the path that gets the company to profits, but Mel has pointed everyone in the right direction.

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I find myself at a complete loss in attempting to figure out the point of having the conference call in the first place. For starters, Sirius XM issued a press release that immediately caught the attention of the investment community. It was very well received and the stock initially began an ascent. Then the unthinkable happened, Sirius XM spoke. It was not a sell off mind you, as the overall market took a beating. If not for the numbers they reported it could have been a very, very bad day.

The first problem I have with the conference call is that it lacked any emotion or excitement. In a businesslike manner, numbers were given. Any questions from analysts were deflected or deferred. I don’t think one straight answer was given to any analyst at the end of the call. Ironically, Sirius XM offered much more clarity in the future, yet offered none at the call.

An analyst from JP Morgan wanted to know how much of the 400 million dollars in synergies might be realized this year, and the question was dodged much like a politician would avoid answering a question. When Merrill Lynch’s analyst asked about marketing plans, the response was that the company wanted to talk to the retail community before talking to the financial community. Again, no answer was given.

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SiriusBuzz Radio is on the air once again. The show airs weekly at 9:00 PM EST. each Thursday night. With the SIRIUS XM Radio conference call under our belts, and all of the happening since the merger, there is plenty to talk about.

Join Tyler, Brandon, and Charles live on SiriusBuzz Radio as we discuss recent events, share opinion, and even answer questions. Callers are welcomed and can reach the show by dialing 348-945-7995, and the chat room is open for on line discussion.

SiriusBuzz.com - In Depth Analysis And Out Of This World Coverage

SiriusBuzz Radio - Bringing You The Spirit Of Satellite Radio

Position - Long SIRI

With the Sirius/XM merger all wrapped up, the street has turned to looking at what the future holds for the new SIRIUS XM Radio. Today’s conference call did little to answer that question, other than the ever famous “We are looking into it”, and the “We will be reporting to you frequently.” This was not the answer that I wanted to hear, but I realize that they have only been married for a week and haven’t had time to go through everything yet (as they were prohibited from doing it before). Therefore, I have created my own vision of what I would like the future to hold for SIRIUS XM Radio.

1) In the conference call today, Mel Karmazin repeated the fact that a-la-carte would require a new radio. The technology is available to do this on existing radios, to some extent. While true a-la-carte would probably require a new radio, XM does have some content/channels which requires the consumer to call to activate. They also offer the ability to block certain channels, such as the extreme language channels. Sirius needs to quickly reach out to the XM subscribers and offer their biggest asset, which is Howard Stern. Perhaps with Stern broadcasting on both spectrum’s, they can set Stern to be premium content for XM sooner rather than later. If the move would entice even 5% of XM’s subscribers to pick up this premium channel at $4 per month, this would bring in an additional $22 million dollars per year in just subscriber fees, at no added expense to the company and does not factor in additional ad revenue. A change like this can be done immediately.

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I receive a lot of e-mail regarding the potential of satellite radio in the used car market. While I agree that there is a market there, I have trouble in trying to utilize that factor as a reason to look at SDARS in any manner differently.

The used car channel has the advantage of giving satellite radio potential additional subscribers on vehicles that already have the radio installation subsidized and paid for. This makes that potential subscriber more profitable to the company, but how is that success measured? It is the lack of the ability to measure this metric that always makes me discount it from an investment perspective.

Instead, I try to focus on the metrics that can be measured, and have more predictable results. I look at this used car market as an added bonus should it develop into something more measurable that adds to the bottom line.

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According to a report issued by JD Power, satellite radio is becoming very prevalent in the dashboards of new cars. The survey conducted by JD Power noted that 55% of the respondents stated that their car has satellite radio capability. This represents a sharp 41% increase over the same period last year.

“New-vehicle buyers are looking for the latest technologies in audio systems, and the presence of features such as satellite radio and navigation systems will only increase as manufacturers try to meet consumer demand,” said Allison LaDuc, senior research manager of automotive product quality at J.D. Power and Associates.

The survey was not small potatoes either. 81,530 people who bought 2008 model year vehicles participated. 2009 is set to see installation increases even beyond what we have seen in 2008. Extrapolating the 55% into an anticipated 15,000,000 new car sales this year would mean well over 8,000,000 satellite radio installations in OEM’s for 2008. With a take rate of 50%, that would mean 4,000,000 subscribers.

The survey also noted problems per 100 vehicles in their audio gear. The results are interesting. If you have an AM/FM/Single CD/SAT head unit, Delphi has the fewest problems, and Fujitsu Ten the most. If your head unit has AM/FM/Multi CD Changer/ SAT, then you hope to have a Clarion unit. Pioneer ranked last in this category.

[JD Power Press Release] via [CNN]

Position - Long SIRI

UPDATE: Trading should be normal and investors should be able to buy or sell as they normally would. The ticker, SIRI will remain the same. The only event that has caused confusion by some is that due to the name officially changing to Sirius XM last night. Because of this, a new CUSIP number, 82967N108 has been assigned to the stock.

It is suggested that if you are having a problem, it may be due to your specific broker. Trading can continue as normal because of the fact that the symbol has not changed.

You may have noticed that your SIRI shares are unavailable for trading at the current time. I just spoke with a representative of TD Ameritrade. According to TD Amertitrade’s Reorganization Department, they are waiting for the new Sirius XM shares to be delivered. Accordingly, they report that this could take anywhere from 5-7 days to complete, possibly longer.

As for a ticker change, they are not sure as the new shares have yet to be delivered.

I inquired as to how 4 million shares had already traded at the time of our conversation. After following up with another department, he explained that some new shares have begun to trade.

Scottrade reports that it can take from 2-7 days to begin trading again.