As many know, Sirius XM radio's CEO Mel Karmazin spoke at the Merrill Lunch Media Conference on Tuesday. As anticipated, some additional information was provided to the street regarding expectations, the "Best Of" roll-out, as well as some product information. The reaction by the street was not good, and the stock now trades under $1.00.

One analyst report that I have been eager to see was that of Merrill Lynch's Jessica Reif Cohen. As a media analyst, Cohen has followed the the career of Mel karmazin for quite some time, and in my opinion she has had realistic expectations of many media companies. Today Cohen issued her report on Sirius XM Radio.

While many on the street seemed to pick up various negative aspects of Karmazin's speech, others seemed to pick up the positives, meanwhile Cohen seems to have taken a realistic look at the equity not from a short term perspective or a long term perspective, but rather a business perspective.

Cohen noted that Karmazin did point out several areas where merger synergies would be achieved. The $425 million in synergies falls in line with previous company estimates of $400 million. The additional detail and flavor of these estimates should allow for analysts to better model the company.

Cohen notes that company guidance for 21.5 million subs by YE09 is 6% below their prior forecast of 22.9 millionn, and she attributes the drop to a more conservative outlook on a weakening OEM market. She trimmed her own estimates from the 22.9 million figure to 21.9 million, which is above the number offered by Mel karmazin at the conference. Karmazin maintained his $300 million in Pro-forma EBITDA, but the adjustments made by Cohen in her model have brought her from a figure of $347 million to a new figure of $287 million. The Merill target moved due to their newly updated model on the business.

Cohen outlined that the biggest hurdle for the company, and perhaps investors is the near term liquidity. With a challenging credit market, the refinancing of debt is a major concern to the street, and is an overhang on the stock. No matter how rosy someone feels the future of satellite radio is, the company needs to clear this hurdle. The financing issue is like a wall that blocks any view of what is ahead, and because the company, and by extension the investors, are standing so close to the wall it becomes difficult to see anything beyond it.

Merrill Lynch lowered their price target to $3.40. Despite what they consider long term positive aspects to the company, the equity is being weighed on by weaker OEM and retail channels, as well as the refinancing of about $1 billion in the near term.

For investors, the current situation for satellite radio is frustrating. Clearly, satellite radio remains a speculative play, and investors, which have been battle fatigued for quite some time, are not seeing a light at the end of the tunnel. The economy will at some point change. The hurdle that remains the biggest detractor to the stock is the debt issue. Sirius XM has expressed desires to obtain financing without issuing converts or causing dilution. The longer this issue remains on the table, the more concentrated the uncertainty will bring. Even if the financing is completed, the street may be so jaded that it will take a while for the potential of the business model to be considered.

Position: Long SIRI