Merrill Notes That The Wheels Have Come Off
Merrill Lynch analyst Jessica Reif Cohen issued a critical report on Sirius XM Radio today. The media analyst notes that the 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 US retail (lowest in 3 years); 2) soft electronics sales with Best Buy posting -2% September comp; 3) ML lowered US 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% Y/Y).
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 UNDERPERFORM 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 analysts as well.
Position: Long SIRI







Merrill’s analyst is afaid of losing her job
since she is now employed by BOA.
does she realize we already went to $0.25, actually, think it was $0.22, and we went up from there?
these analysts know nothing! even Weikles was way off with his targets–they were too high, except for the last one which is now too low.
how does Cohen justify her prior targets?
how does Weikles justify his prior targets?
these are just manipulative targets, not predictive targets.
Congress and the SEC should investigate these practices and throw some of these people in jail for these practices.
Consider this…
Up to now Weinkes is the only analyst with any credibility when it comes to Satrad. Perhaps Jessica is bringing her rating down to him in order to give Mel a chance for a boost on Monday… expectations are exceptionally low and even a little surprise could have a nice short term impact on the pps. If Jessica were to upgrade her target price next week, it’ll carry more weight now that she’s down here with Weinkes.
SIRIUS held it’s own today with the worst of all news. Must be something positive coming. One month of down sales doesn’t make a bad year. I read today that sales have already picked up with gas down to $2. I thought the bottom would drop out today. Mel knew these bad sales were coming and the high gas prices? What a prophet. I hope the Q3 figures surprise. Maybe that is what held up the price today. Could this be the bottom for SIRI?
What I don’t understand is why GM defended their stock with positive comments and Mel hasn’t. And when is the Q3 results coming? Wouldnt they have leaked if there was anything positive coming? Or is Mel going to kill the shorts? I would love that!!
Mel has been INSANELY silent. After the criminal 17 month merger delay that Mel CONVINCED us would be GOOD for the shareholders….he signs that UGLY deal and sells us out to the shorts.
HE FUCKING SOLD US OUT TO THE MUTHA F’in SHORTS!!!!
The few times he HAS spoken he said NO on a Reverse Split Or further Dilution.
AND WHAT DOES SIRIUS DO a WEEK LATER???
It issues a proxy ASKING FOR A GOD DAMN 1 for 50 REVERSE SPLIT and an CRAZY 4 BILLION MORE IN DILUTIVE SHARES!!!!!!
Now even the once FRIENDLY analysts are giving us a .25 cent target price. It’s not just GS anymore.
To think I am stuck in this stock when it was only $1. I WAS going to put my money in ESLR at $2.50….but Nooooooooo.
Now ESLR is nearly $6 in just a couple of WEEKS!!!!!! And probably going back to $8 or $12 again. I could have made $10 grand in a week. Instead I am DOWN 6 grand!!!
I HATE this stock. I HATE Mel. But I LOVE sat radio.
TOTALLY SUCKS. Mel is a stupid ass big toothed liver spotted liar.