Wednesday, April 04, 2007

Calyon: Shares Offer An Excellent Risk/Reward

04-Apr-07 08:52 ET
In Play www.briefing.com

SIRI/XMSR: Calyon still sees 55-60% probability of merger; things aren't that bad absent merger : Calyon says with nother recent ~21% pullback in SIRI and XMSR since their merger announcement, firm believes the shares offer an excellent risk/reward. They continue to see a 55%-60% probability of merger approval and believe that recent NAB opposition highlights that terrestrial radio may be considered competition by the D.O.J. Firm notes potential for positive catalysts: 1) merger could be unexpectedly approved by D.O.J. in late summer, 2) comparisons in retail channel get materially easier by 2Q, 3) a large OEM could commit to going standard, similar to several small operators. What could go wrong: 1) XMSR's 2007 subscriber guidance is likely too high, 2) weak retail sales could be a leading indicator for rising churn or lower OEM conversion, 3) OEM's could stop at 40% instead of moving toward standard, 4) a merger could be denied, though they think that is already expected.