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Monday, April 30, 2007

Lehman On Sirius' Q1 Expectations

April 30, 2007

SIRIUS SATELLITE RADIO (SIRI: $2.99, 1:OVERWEIGHT): 1Q07 EXPECTATIONS RECAP

We expect SIRI to report 1Q07 results tomorrow, May 1st before the open. The company has scheduled a conference call for 8:00AM EST (webcast: www.sirius.com) to discuss the results.

We recap our expectations for the quarter below and in the attached Excel file.

Subscribers. 523k net adds, 957k gross adds, churn of 2.30%, subscriber ARPU of $10.24.

Acquisition Costs. SAC of $102, CPGA of $138.

Revenue, EBITDA and FCF. $210MM revenue, $120MM EBITDA loss (including option expense), $0.11 EPS loss, $183MM FCF loss.

4/30/2007 06:35:00 PM


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Slacker Gets More Press

April 30, 2007

Here at SSG we have been covering Slacker since it was first introduced. We covered the press releases, and have even conducted an interview with the company. Our take has been that Slacker is a pretty compelling product, and that it is indeed a viable new competitor in the audio entertainment landscape.

Now, Slacker is getting the attention of some of the more well known publications such as the Motley Fool.

Article Excerpt:

You probably haven't heard a lot about Slacker. The music-playing device doesn't hit the market until June, and the world assumes that Apple (Nasdaq: AAPL) is going to own the digital-music space for several more years at least. Naysayers who claim otherwise are just showing up too soon -- or is that too Zune? -- for their own good.

But the key here is that Slacker doesn't have to be an iPod killer to emerge as a truly disruptive innovation. Actually, the more I learn about Slacker, the more I am starting to believe that it will be music-subscription services like Napster (Nasdaq: NAPS) and growing broadcast technologies such as HD radio and satellite radio that need to be looking over their collective shoulder........READ MORE HERE

4/30/2007 01:11:00 PM


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Morgan Joseph On Sirius

April 30, 2007


SIRI Sirius Satellite; 1Q07 preview; stock likely bottomed, but upside limited for now - Morgan Joseph (3.04 )

Morgan Joseph notes SIRI to report 1Q07 results on May 1, before the markets open. Firm forecasts revs and EBITDA of $207.7 mln and ($86.1 mln) vs. $126.7 mln and ($421.2 mln) a year ago. They are looking for EPS of ($0.09) vs. ($0.33) last year. They believe the story here is now all about the merger and they are worried that SIRI, in particular, will be negatively affected by CEO Mel Karmazin's focus on getting the merger approved. While firm believes XMSR is doing its part to get the deal approved, SIRI's CEO has been the real public face of the deal. Firm expects the co to add 425,000 total subscribers during the quarter to reach a total of 6.45 mln total subscribers at the end of 1Q07.

4/30/2007 10:16:00 AM


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Clear Channel Gets Trendy

Clear Channel Debuts Social Networking
Radio giant Clear Channel is getting into the social-networking business. The company's online music and radio division will introduce a dozen station-branded social networks this summer.
www.radioandrecords.com, Apr 30

Seven station-branded sites online, five more due this summer Radio giant Clear Channel is getting into the social-networking business. The company's online music and radio division will introduce a dozen station-branded social networks this summer. Each social network will function essentially as a "mini-MySpace" but will be focused on the local community served by the station operating it. The initiative starts Monday (April 30), with the launch of social networks for seven CHR/top 40 stations across the country...read more: here

4/30/2007 09:50:00 AM


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HD Radio Has Failed To Win Over U.S. Carmakers

Automakers Not Jumping Into HD Radio "We're investigating HD radio and we'll probably make a decision in six months. When you add up the cost, it's a lot of money," said Michael Kane, director of technology strategy for Chrysler.
By Reuters InformationWeek April 27, 2007

Radio broadcasters, facing increased competition from iPods and satellite radio, are pushing a new digital format called HD Radio that has so far failed to win over U.S. carmakers.
Hyundai Corp., BMW AG, and Ford Motor Co.-owned, Britain-based Jaguar plan to offer HD Radio, and other carmakers are also set to announce deals.
Because of the amount of time people spend listening to the radio in their cars, striking such deals will be critical if the technology is going to take off.
But officials from General Motors Corp. and Chrysler Group said they were not rushing to commit to the devices, which would cost the struggling Big Three U.S. automakers as much as an estimated $600 million annually to install.
"We're investigating HD radio and we'll probably make a decision in six months. When you add up the cost, it's a lot of money," said Michael Kane, director of technology strategy for Chrysler, a unit of DaimlerChrysler AG.
Ford was not immediately available for comment...read more: here

4/30/2007 09:47:00 AM


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Sirius Q1 Preview From SSG

April 30, 2007

In case you missed it we are republishing our Q1 2007 earnings preview for Sirius.

Sirius will be having their Q1 conference call prior to the market opening on Tuesday. This means that investors have two trading days left before Sirius’ news hits the streets. All things considered, Sirius has had the ability for several quarters to compile some good numbers for the earnings call, and this quarter should be no different. There are a few key items to consider going into the call:

GREAT YOY EPS COMPARISON

Last year in Q1 Sirius took a big expense for the Howard Stern shares. That expense accounted for $220,000,000 of the loss last year. That means that the narrower loss that Sirius reports this year will be very good in comparison. The street is expecting a loss of 11 cents. Last years loss was 33 cents. It does not take much imagination to see headlines proclaiming the substantially narrower loss.

STRONG OEM CONTRIBUTION

Sirius is getting deeper penetration from DCX who is reported to be at 40%. With DCX selling nearly 540,000 cars in Q1, and manufacturing still happening, the DCX contribution could well approach 220,000 GROSS additions alone. Ford is also ramping up, and other partners have made strong commitments as well. Although Sirius has not provided flavor on the subscriber split between retail and OEM, I would estimate that Sirius will come in with roughly in the neighborhood of 550,000 additions.

IMPROVED EXPENSE SITUATION

Last year until very late in the year, Sirius was anticipating 6,300,000 subscribers. They came in with a bit over 6,000,000. Sirius likely had a substantial stockpile of radios that had the SAC expenses already paid in 2006 left over. These radios, virtually free of 2007 expense, would have been the crop that sold in 2007. Simply stated, this means that Sirius likely had to build far fewer radios this Q1 than they did last year. The expenses associated with radios can have a noticeable difference this year. Additionally, in Q4 2005, some expenses pushed forward into Q1 2006. We anticipate that that kind of activity will be a lot less this year.

Now, with all of that being said, here is our outlook for Q1 2007:

SUBSCRIBERS

We anticipate GROSS subscribers to arrive in at 1,030,000. We anticipate the NET number to be at somewhere between 545,000 and 565,000. If I had to throw an exat number I would place it at 557,000.

CHURN

Sirius reports a fully loaded churn number. They guided to full year churn of 2.2% to 2.3%, and I think they will come in just above that range for Q1. I am anticipating fully loaded churn of 2.4%.

REVENUE

I am anticipating revenue of $229,000,000

EPS

The street is looking for a loss of 11 cents per share. I am anticipating that Sirius will beat that estimate and come in at a loss of 10 cents per share. Some big factors in arriving at this number relate to savings discussed above.


CASH

The unknown in this situation is CAPEX spending for their satellite. As pointed out by a reader, this would not impact EPS. CAPEX is a balance sheet and cash flow metric. The big factor here relates to cash burn. if Sirius is building out the satellite faster than anticipated, there will be an impact to cash. However, the satellite buildout has been budgeted already by Sirius in their cash flow projections.

SAC/CPGA

This subject always draws some interesting comparisons to XM. What investors need to remember is that SAC and CPGA are not dictated by Generally Accepted Accounting Principals (GAAP). This means that the company can dictate what goes into these numbers, and how things are accounted for. There is nothing wrong with the way Sirius or XM count SAC and CPGA, investors just need to understand the differences. The structure of deals such as OEM deals play an important role in these metrics. That being said, I anticipate SAC to come in at $103 and CPGA (though Sirius does not report this metric) to be at $136. As Sirius rolls out newer chipsets in the OEM channel, these metrics will improve further.

CALL DEAILS

Look for the call to be pretty straight forward without a lot of bells and whistles. Sirius will likely give some mention to the video initiative, as well as some flavor on the merger. Look for the Gross subscriber number to be highlighted, and perhaps even some flavor for the first time on Gross retail additions, although I think this is unlikely. Market share may be briefly discussed, as Sirius will have passed the 45% mark on overall market share, representing over 25 basis points of improvement since Stern was announced in the fall of 2004.

TRADING ACTION

I encourage investors to watch the volume closely. With XM reporting a decent quarter, and the spike in PPS, there will be many considering their moves prior to the call. Also of note will be the options market. Investors should watch the volume and open interest of sirius and XM options as well. Options information can be obtained at www.cboe.com

4/30/2007 09:34:00 AM


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Friday, April 27, 2007

NAB Hypocracy - Loud And Clear

April 27, 2007

You can count on one thing from the NAB.........They will argue staunchly if it fits their agenda.

In the statement below, the NAB suggests that they will work to craft legislation that will ensure the survival of a fledgling audio platform. Funny, they do not do the same for satellite radio. I wonder why.

NAB STATEMENT ON INTRODUCTION OF
THE INTERNET RADIO EQUALITY ACT

WASHINGTON, DC
- Rep. Jay Inslee (D-WA) today introduced the Internet Radio Equality Act. According to a memo from Rep. Inslee's office, the bill will "reverse the recent [Copyright Royalty Board] decision and change the royalty rate-setting standard that applies to commercial Internet radio royalty arbitrations so that it is the same standard that applies to satellite radio. For public radio, the bill sets a royalty standard designed for noncommercial entities."


The following statement can be attributed to NAB Executive Vice President Dennis Wharton:


"NAB is reviewing details of Rep. Inslee's bill, which would overturn the Copyright Royalty Board's disappointing decision to dramatically raise fees for companies that stream music over the Internet. We will work with Congress to craft a solution that helps ensure the survival of a fledgling audio platform."

It would appear that the NAB wants to fight for this platform because THEY BROADCAST IN THIS MANNER. Despite the fact that they want you to believe that they are a "local business", internet radio (available nationally and internationally) is a booming business for the members of the NAB. In fact, it accounted for $200,000,000 in revenues for terrestrial radio stations in 2006!!!!

So, what we have on one hand is the NAB fighting FOR a "fledgling" internet radio industry, but wanting to fight AGAINST a "fledgling" satellite radio audio platform on the other hand. The double speak is beginning to get even deeper than I thought it would!!!! Since when does the NAB carry an interest in a "fledgling audio platform"? Ever seen the stance of the NAB on the "fledgling" Low Power FM proposals? Take a look, you will find their position very interesting.

However, as a SDARS supporter, I am glad to see that the NAB will be spending resources to protect Sirius Internet Radio and XM Internet Radio.

4/27/2007 10:40:00 AM


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Wedbush Comments on SDARS and XM Q1

April 27, 2007

XM Satellite Radio (XMSR- HOLD): Q1 Results Meet Lowered Expectations

- Q1 results in line with low expectations as retail softness continues from last year.

- XM's subscriber results should generally improve from Q1 levels throughout most of the year.

- With guidance, sometimes no change is good news.

- Minor model revisions shave a dollar off our price target.

- We still favor Sirius given its competitive strengths and our perception that the proposed merger's approval is unlikely.

4/27/2007 10:15:00 AM


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Lehman on XMSR - Long Term Story Intact

April 27, 2007

XM SATELLITE RADIO (XMSR: $11.01, 1:OVERWEIGHT): Updating Model, Long Term Story Intact

We are adjusting our 07E estimates to reflect in line 1Q07 results and incorporate data points from incremental company guidance. We expect 9.13MM YE07 subs, slightly lower than our prior estimate of 9.21MM due to fewer retail net adds. We now expect larger EBITDA losses for full year 07E, partially driven by higher CPGA. Shares could be range-bound over intermediate-term as the LT OEM fundamental story is not fully proved out yet and merger uncertainty remains. We are adjusting our 07E price target to $20 from $22 but remain constructive on the name.

Adjusting our estimates for actual 1Q07 results and additional company guidance data points.
Full-year 07 ests: 9.13MM YE subs, $113 CPGA, $1.02BN subscription revenue, $178MM EBITDA loss excluding merger costs and stock option expense, $400MM FCF loss.
2Q07 ests: 332k net adds, 958k gross adds, $65 SAC, $117 CPGA, churn 2.6%, subscriber ARPU $10.23. Revenue $279MM, EBITDA loss (w/ stock comp, merger costs) $71MM, FCF loss $70MM.

Continue to expect mix shift toward OEM but timing of OEM acceleration likely 2H07E, 2008E.
Company will likely be FCF positive in 2009E.

We are adjusting our estimates to reflect 1Q07 results, which were generally in line with our expectations, and revised company guidance on CPGA and adjusted EBITDA loss for full-year 2007. We now expect 9.13MM YE 07E subscribers, which remains in line with the company’s reiterated subscriber guidance (9.0-9.2MM at YE 07E) but is down slightly from our prior estimate of 9.21MM due to fewer retail net additions. Our revised estimates reflect 1.50MM total net additions for full-year 07E. We continue to expect shift in subscriber mix as OEM accelerates in 2007E and 2008E, with 75/25 OEM/retail mix of net additions for full-year 2007E. With 1Q07 results, the company provided additional details on full-year 07E guidance; guidance for CPGA is $111-114 and adjusted EBITDA (excluding merger costs) is $170-180MM. We are adjusting our EBITDA estimate to reflect larger loss, reflecting higher CPGA (partially due to write-down of obsolete hardware), and a higher estimate for merger-related costs. We are adjusting our YE 07E price target for XM to $20/share from $22/share. We continue to be constructive on XMSR based on the long-term OEM-driven fundamental story; stock may, however, remain range-bound in intermediate term as fundamental story is not yet fully proved out (OEM will likely accelerate in 2H07E and 2008E) and merger uncertainty remains.

Estimate Revisions.

We are adjusting our estimates to reflect 1Q07 actual results and revised company guidance. We have summarized our estimate revisions below.

Subscribers. Our YE 2007E subscriber estimate is now 9.13MM (vs. our prior estimate of 9.21MM), with 1.50MM net additions for full-year 2007E (vs. our prior estimate of 1.58MM). This is directly in line with guidance that the company reiterated, 9.0-9.2MM YE 07E subscribers. We expect 4.16MM gross additions in 2007E, down from our prior estimate of 4.21MM as our churn estimate remains unchanged at 2.6%. Our subscriber ARPU estimate is now $10.23, slightly below our prior estimate of $10.29.

SAC and CPGA. We now expect full-year 07E SAC of $66, flat YoY and vs. our prior estimate of $65. We are increasing our CPGA estimate to $113 (vs. our prior estimate of $110), due to a combination of lower gross additions and hardware write-offs.
Revenue. Our full-year 07E revenue estimates are slightly lower, driven by slightly lower subscriber ARPU. Our subscription revenue estimate ($1.02BN) remains in line with company guidance.

EBITDA. Excluding estimated merger costs ($44MM), we now expect full-year 07E EBITDA loss (excluding stock compensation) of $177MM, which is in line with company guidance of $170-180MM. We expect full-year 07E EBITDA loss (including stock compensation and merger costs) of $222MM (vs. our prior estimate of $185MM) due to higher CPGA and merger costs.

Free Cash Flow. We now expect XM to generate positive free cash flow (FCF) positive for full-year 2009E, vs. our previous expectation of 2008E, reflecting lower 08E EBITDA and deferred revenue.

4/27/2007 10:12:00 AM


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Bear Stearns Highlights on XMSR's Q1

April 27, 2007

Bob Peck issued a report on XM’s Q1 highlights:

In-Line Results Drive Relief Rally: Maintaining Outperform

• Investment Thesis. We believe extremely low expectations coupled with in-line results drove
the outperformance in the stock yesterday. Both satellite radio stocks have declined significantly since they announced the merger primarily due to uncertain merger outcome, limited visibility into the DOJ process, challenging retail environment, and OEM ramp only in 2H07/2008. As such, although we think the shares remain attractive for the long term investor with an appetite for risk, investor interest likely may remain muted until there is more visibility into the merger outcome or the YoY unit sales comps improve.

• In-Line Quarter. XM reported 1Q07 results that were in line with our expectations across every metric except gross adds (which were marginally weaker) and churn (which was better than our and street estimates).

• 2007 Guidance Reiterated; Higher CPGA and Adjusted EBITDA Losses Expected. Company reiterated sub guidance of 9-9.2 mn, subs revs of $1 bn, CFO to improve YoY in 2007, and likely positive in 2008; but increased CPGA expectation to $111-$114, and Adjusted EBITDA losses to $(170)-$(180) mn excl merger costs. Our 2007 projections: 4.2 mn gross adds, 1.47 mn net adds, 9.1 mn ending subs, self-paid churn 1.8%, SAC $68, CPGA $113, total ARPU $11.43, total revenues $1.1 bn, Adjusted EBITDA $(207) mn including $32 mn in merger costs, CF from ops $(120) mn.

• Valuation. While XM reiterated expectation of high-teens ending subs by 2010, we have a more conservative estimate of 12.9 mn at YE 2010. Given our more conservative stance with
respect to sub growth, we are tweaking our year-end 2007 target price to $15 from $17 previously, which is based on a DCF with WACC of 11%, and perpetual growth rate of 4%. We underscore that our valuation merely reflects the value of the standalone business; if the proposed merger with Sirius were approved, the potential synergies from the merger would drive valuations in the low-to-mid-$20/share vicinity

4/27/2007 10:08:00 AM


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UBS UPGRADE - More Detail

April 27, 2007

- Upgrading XMSR on improving fundamental outlook in 2H07 Following 1Q07 results, we believe there is improved visibility for an inflection in subscriber growth during 3Q07. We expect 3Q07 net adds of 319k vs. 3Q06 of 286k. Specifically, we believe churn has begun to
stabilize as evidenced by 1Q07 churn of 2.5%, up modestly from 1Q06 and down from 2.8% in 4Q06. While gross adds were weaker than expected in 1Q07, we believe the increases in OEM commitment expected in 2H07 will have a positive impact on gross adds, coupled with the improving churn would lead to increases in net adds.

- Better operational execution at SIRI supports upgrade Ahead of SIRI's 1Q07 results on May 1, we are upgrading the stock to Buy

- Following XMSR's 1Q07 results, we believe SIRI remains the business with better execution as is evidenced by our 485k net add estimate in 1Q07 vs. XMSR net adds of 285k. We believe SIRI will maintain better market share of growth through 2008. SIRI will also benefit from the
continued push toward factory installs among the OEMs in 2H07.

- Increasing targets for both XMSR and SIRI. We base our price targets on detailed DCF analyses for both companies. Our assumptions include 3% growth in perpetuity and 13% WACC for both XM and SIRI. We are increasing our XMSR target to $15 from $13.50 and our
SIRI target to $3.70 from $3.50.

Subscriber Growth Estimates

Upgrading Satellite Radio Stocks We are upgrading XM and Sirius to Buy 2 from Neutral 2. We have increased our XMSR target to $15 from $13.50 and increased our SIRI target to $3.70 from $3.50. Our revised targets represent 27% potential upside for XMSR and 25% for SIRI.

Why now?

We have been Neutral on both XM and SIRI since July 20, 2006. Our concern has been the overall fundamental malaise that has hit both companies since plug-and-play receivers were being held from shipment due to interference concerns. Our focus has been on a recovery in
subscriber growth, which we believe will be led by OEM penetration and will drive further retail growth. We believe the visibility for OEM growth has sufficiently improved that we will start to see a recovery toward the end of 3Q07 and this could translate to improved subscriber
outlook in 4Q07 and into 2008.

- XMSR may be turning the corner a bit sooner than expected. We believe XMSR 1Q07 results provided insight into the efforts management has been making to turn around the business, which is highlighted by the 1Q07 churn result. We believe a number of read-throughs include: annual growth in 3Q07 net additions, one quarter ahead of expectations; sequential growth in net adds through the rest of 2007; and the beneficial impact of OEM penetration on 2H07 and 1H08 outlook.

- SIRI's execution justifies a positive outlook. Our view on SIRI includes the strong execution at the business, which we believe is demonstrated by continued market share dominance and leverage to greater FCF than XMSR. SIRI reports 1Q07 results on May 1, before the open. Following the XMSR results, we believe SIRI's outlook could provide additional positive data points for both companies.

- First quarter 2007 results support upgrade of XMSR. As we have discussed, we believe XMSR has been moving in the right direction with regard to customer retention at both the retail and OEM level. XM has brought its customer service center onshore to the U.S.,
which should improve the overall customer experience. Additionally, XM has moved forward with its OEM partners to actively contact XMSR promotional subscribers as well as use dealer incentive and email programs to improve conversion rates for OEM promotional and free users.

XM passes 8 million subscribers. XM announced it recently passed 8 million subscribers, which implies through April, XM has added over 85k net additions, with May and June traditionally better growth months than April. We believe the growth through April provides support for
sequential growth in net adds for 2Q07, which we estimate will be 300k. We believe 2H07 will experience further strength with 3Q07 generating 319k net adds or 12% year-over-year growth from 3Q06.

EBITDA guidance excluding legal and merger expenses. XMSR provided guidance for 2007 EBITDA loss of $(170) million to $(180) million excluding merger and legal expenses, which was higher than our previous estimate of $(150) million. We believe the difference comes from higher outlook for acquisition costs (CPGA guidance of $111 to $114 vs. UBSe $108) and higher subscriber outlook. We estimate merger expenses are likely in the $25-$30 million range for 2007, including $8 million spent in 1Q07. Accordingly, our revised EBITDA estimate of $(197) million would imply roughly $(170) million excluding merger expenses. We have increased our subscriber estimate to 9.05M from 8.94M and our CPGA estimate to $112 from $108.

Remain comfortable with liquidity position of XMSR. XM ended 1Q07 with $319 million in cash and full access to its $400 million credit facilities. The cash spent to pay upfront MLB expenses ($60M) and capex for XM-5 ($90M) represents the highest cash outlay for the year. While
we do not expect sustainable FCF for XMSR until 2009, we do not project XMSR tapping the capital markets for the life of our model.

- SIRI upgrade on improving industry outlook and execution. As a read-through from XMSR 1Q07 results, we believe SIRI's results will be viewed positively when it reports on May 1. We expect SIRI to report net adds of 485k. While this growth would represent a 36% decline
year-over-year, for the sixth consecutive quarter SIRI will have greater net addition market share than XM. Based on our estimates, SIRI would have 63% market share in 1Q07. We expect SIRI to continue to lead in subscriber growth through at least 2008.

Leverage in the business model will continue to develop. We expect SAC and CPGA to continue to fall for SIRI. While acquisition costs remain higher for SIRI than XM, SIRI continues to benefit from scale and we expect further declines in acquisition costs throughout 2007. Additionally, we believe SIRI has been able to leverage its faster growth into more sustainable cash flow metrics. Due to the expected launch of SIRI-5 in 2008, we believe sustained FCF will be delayed until 2009, in-line with XMSR, but we do not believe SIRI will face any liquidity crunch in the meantime. We expect SIRI to generate greater cash flow from operations than XMSR in 2008.

Second half 2007 could indicate recovery in retail and growth in OEM. Retail remains a weak driver of growth for both companies. Given SIRI has traditionally had greater dependence on retail the continued year-over-year declines in retail gross additions have impacted SIRI's
growth and expected outlook through 2007. We believe late 3Q07 could represent an opportunity for retail growth to annualize easier comps and begin to show positive growth. Coupled with increases in OEM penetration (Mercedes recently announced plans to reach 80% factory installs), we believe SIRI can start to stabilize its growth. We continue to expect
y-y declines in net adds, but this should start to recoup by 1H08.

4/27/2007 09:56:00 AM


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UBS Upgrades Both XMSR & SIRIUS To Buy

UBS Upgrades XM Satellite To Buy From Neutral
UBS Upgrades Sirius Satellite To Buy From Neutral

(END) Dow Jones Newswires
04-27-07 0029ET
Copyright (c) 2007 Dow Jones & Company, Inc.

Details to follow...

4/27/2007 07:06:00 AM


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XMSR: S&P Maintains 3 Stars

XM Satellite Radio (XMSR)
Maintains 3 STARS (hold)
Analyst: Tuna Amobi, CPA, CFA
Before a one-time loss we estimate at 1 cent per share, the company's first quarter loss per share of 39 cents, vs. a 55-cent loss one year earlier, is in line with S&P and Street estimates. We see multi-year ramp up of installation in OEM automotive units (GM, Honda, Nissan, Toyota), vs. a dip in conversions and more retail weakness. XM affirms 9.0-9.2 million subscribers for 2007 and sees $111-$114 cost per subscriber (vs. a prior forecast of $108), and expects a $170-$180 million adjusted operating loss vs. $166 million, but positive 2008 EBITDA. With potentially formidable odds against regulatory approval of merger with Sirius (SIRI), our 12-month target price stays at $13...read more: here

4/27/2007 06:00:00 AM


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Satellite Radio TechWorld On Sirius Backseat Video

Sirius Answers Questions on Backseat Video
via SatelliteRadioTechWorld, Apr 26

Today, Sirius fired back at the WCS Coalition who earlier questioned whether Sirius had the right to provide backseat video. The very last footnote says it all:From the start, Sirius kept the FCC fully informed, including a widely attended January 22, 2004 meeting with FCC staff (at the staff’s request) to discuss its plans and the authority for 3-4 channels of backseat video ancillary to satellite radio.In another tidbit of information, Sirius states that video will take less than 1/5 of its bandwidth. So, we can calculate that video will consume 2.5 MHz of the 12.5 MHz band, or 0.625 to 0.833 MHz per channel. Since it is broadcast on 3 carriers (two satellites and one repeater), the numbers have to be divided by 3, meaning that each channel per carrier will consume 208 to 278 KHz. If we understand the technology correctly, that should translate into video streaming somewhere on the order of 625 to 833 kbps per channel. That gives us an idea of the quality that we should expect...read more: here

4/27/2007 05:00:00 AM


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Thursday, April 26, 2007

SSG's Sirius Q1 Preview

April 26, 2007

Sirius will be having their Q1 conference call prior to the market opening on Tuesday. This means that investors have two trading days left before Sirius’ news hits the streets. All things considered, Sirius has had the ability for several quarters to compile some good numbers for the earnings call, and this quarter should be no different. There are a few key items to consider going into the call:

GREAT YOY EPS COMPARISON

Last year in Q1 Sirius took a big expense for the Howard Stern shares. That expense accounted for $220,000,000 of the loss last year. That means that the narrower loss that Sirius reports this year will be very good in comparison. The street is expecting a loss of 11 cents. Last years loss was 33 cents. It does not take much imagination to see headlines proclaiming the substantially narrower loss.

STRONG OEM CONTRIBUTION

Sirius is getting deeper penetration from DCX who is reported to be at 40%. With DCX selling nearly 540,000 cars in Q1, and manufacturing still happening, the DCX contribution could well approach 220,000 GROSS additions alone. Ford is also ramping up, and other partners have made strong commitments as well. Although Sirius has not provided flavor on the subscriber split between retail and OEM, I would estimate that Sirius will come in with roughly in the neighborhood of 550,000 additions.

IMPROVED EXPENSE SITUATION

Last year until very late in the year, Sirius was anticipating 6,300,000 subscribers. They came in with a bit over 6,000,000. Sirius likely had a substantial stockpile of radios that had the SAC expenses already paid in 2006 left over. These radios, virtually free of 2007 expense, would have been the crop that sold in 2007. Simply stated, this means that Sirius likely had to build far fewer radios this Q1 than they did last year. The expenses associated with radios can have a noticeable difference this year. Additionally, in Q4 2005, some expenses pushed forward into Q1 2006. We anticipate that that kind of activity will be a lot less this year.

Now, with all of that being said, here is our outlook for Q1 2007:

SUBSCRIBERS

We anticipate GROSS subscribers to arrive in at 1,030,000. We anticipate the NET number to be at somewhere between 545,000 and 565,000. If I had to throw an exat number I would place it at 557,000.

CHURN

Sirius reports a fully loaded churn number. They guided to full year churn of 2.2% to 2.3%, and I think they will come in just above that range for Q1. I am anticipating fully loaded churn of 2.4%.

REVENUE

I am anticipating revenue of $229,000,000

EPS

The street is looking for a loss of 11 cents per share. I am anticipating that Sirius will beat that estimate and come in at a loss of 10 cents per share. Some big factors in arriving at this number relate to savings discussed above.
CASH
The unknown in this situation is CAPEX spending for their satellite. As pointed out by a reader, this would not impact EPS. CAPEX is a balance sheet and cash flow metric. The big factor here relates to cash burn. if Sirius is building out the satellite faster than anticipated, there will be an impact to cash. However, the satellite buildout has been budgeted already by Sirius in their cash flow projections.

SAC/CPGA

This subject always draws some interesting comparisons to XM. What investors need to remember is that SAC and CPGA are not dictated by Generally Accepted Accounting Principals (GAAP). This means that the company can dictate what goes into these numbers, and how things are accounted for. There is nothing wrong with the way Sirius or XM count SAC and CPGA, investors just need to understand the differences. The structure of deals such as OEM deals play an important role in these metrics. That being said, I anticipate SAC to come in at $103 and CPGA (though Sirius does not report this metric) to be at $136. As Sirius rolls out newer chipsets in the OEM channel, these metrics will improve further.

CALL DEAILS

Look for the call to be pretty straight forward without a lot of bells and whistles. Sirius will likely give some mention to the video initiative, as well as some flavor on the merger. Look for the Gross subscriber number to be highlighted, and perhaps even some flavor for the first time on Gross retail additions, although I think this is unlikely. Market share may be briefly discussed, as Sirius will have passed the 45% mark on overall market share, representing over 25 basis points of improvement since Stern was announced in the fall of 2004.

TRADING ACTION

I encourage investors to watch the volume closely. With XM reporting a decent quarter, and the spike in PPS, there will be many considering their moves Friday and Monday.

4/26/2007 10:16:00 PM


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New investors - Positive News - And Shorts

April 26, 2007

With XM reporting a decent quarter, one would think that all eyes will shift to Sirius at this point. However, this in not the case. Instead all eyes will now be shifting to the trading action this afternoon, tomorrow and Monday.

XM’s quarter showed numbers that illustrate that the company is very viable, and that they can continue growth. Those that carry a negative sentiment are now rethinking their position. Those that are short are now wondering what to do. Do they cover, or do they believe that this will all settle down going into the Sirius call?

In my opinion these equities will see some very strong volume, and the recent pricing activity gives strength to the equities. It has been my opinion for quite some time that a lot of people have been sitting on the sidelines. If that group of people decide that now is the time to get into SDARS, it has potential to cause a run.

In recent months, any positive momentum was quickly stifled by those that were on the short side of the equation. With SDARS beat up substantially already, the shorts have to begin to wonder how much room is left in their position. Realistically speaking, these companies have value, so room to the downside can get squeezed quickly.

Investors should watch volume and price action closely going into the Sirius conference call.

4/26/2007 11:55:00 AM


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XM Annouces Q1 2007

April 26, 2007

XM Satellite Radio Holdings Inc. Announces First Quarter 2007 Results

First Quarter Ending Subscribers Exceed 7.9 Million; First Quarter Revenue Increased 27 Percent Year over Year to $264 Million; First Quarter Net Loss Narrowed Year over Year by 18 Percent to $122 Million; Company Recently Surpassed 8 Million Subscribers


WASHINGTON, April 26 /PRNewswire-FirstCall/ -- XM Satellite Radio Holdings Inc. (Nasdaq: XMSR - News) today announced earnings for the three-month period ended March 31, 2007. Revenue for the 2007 first quarter increased 27 percent year over year to $264 million compared to $208 million in the 2006 first quarter. XM's 2007 first quarter net loss narrowed to $122 million, representing an 18 percent improvement compared to the 2006 first quarter net loss of $149 million.

XM ended the 2007 first quarter with more than 7.9 million subscribers compared to 6.5 million subscribers in the prior year period. Additionally, XM announced that it recently surpassed 8 million subscribers.

"During the quarter, we improved our retail performance, experienced strong OEM gross additions, extended our distribution agreements with Toyota and Honda, enhanced our customer service, maintained our churn rate at approximately 1.8 percent for the third consecutive quarter and strengthened key financial metrics for our business," said Hugh Panero, chief executive officer, XM Satellite Radio. "These results were driven by the operational initiatives we put in place over the last several quarters."

For the first quarter of 2007, adjusted operating loss (formerly adjusted EBITDA) improved by 45 percent to a loss of $27 million from a loss of $49 million in the prior year period. The 2007 first quarter adjusted operating loss includes $8 million in expenses related to the company's pending merger with Sirius Satellite Radio.

The primary differences between net loss and adjusted operating loss are non-operating amounts and certain operating non-cash charges. For a full reconciliation of XM's net loss to adjusted operating loss, see the attached financial schedules.

In the 2007 first quarter, XM recorded gross subscriber additions of 868 thousand and net subscriber additions of 285 thousand which compare to 1 million gross additions and 569 thousand net subscriber additions in the 2006 first quarter.

In the 2007 first quarter, XM's subscriber acquisition costs (SAC), a component of cost per gross addition (CPGA), was $65 compared to $59 in the first quarter of 2006. CPGA in the 2007 first quarter was $103 compared to $93 in the first quarter of 2006.

As of March 31, 2007, the company had $319 million in cash compared to $218 million at the end of December 31, 2006. In February 2007, we completed the XM-4 satellite sale leaseback transaction. As of March 31, 2007, the company had full availability of its $400 million credit facilities resulting in total available liquidity of $719 million.

OEM and Retail

During the first quarter of 2007, the company achieved the following in its OEM and retail channels:


* Honda and Toyota signed new ten-year deals in which XM will be their
factory-installed satellite radio provider;

* GM produced its 5 millionth XM equipped vehicle in January;

* Honda and XM launched a certified pre-owned remarketing program, which
complements the program that Acura and XM launched in the Fourth
Quarter of 2006;

* Infiniti announced that XM will be a standard factory-installed
feature in all 2008 models;

* Hyundai announced that the all-new Hyundai Veracruz midsize crossover
will join the Azera, Elantra, Santa Fe and Sonata as Hyundai vehicles
with XM as a standard factory-installed feature; and

* Despite a soft retail segment, the company's overall retail market
share showed sequential improvement based on findings from industry
NPD data.

Programming
During the 2007 first quarter, the company:

* Kicked off its third season of Major League Baseball, broadcasting
every game for every team to customers nationwide;

* Signed a long-term broadcasting and marketing agreement with the
Southeastern Conference, adding to the company's premier college
sports portfolio, which includes the ACC, Big East, Big Ten, and Pac-
10;

* Aired exclusive radio coverage of the 49th Annual Grammy Awards; and

* Renewed its contract with Bob Dylan, who will continue to host his
acclaimed radio show exclusively on XM.

Pending Merger with Sirius Satellite Radio

On February 19, 2007, XM Satellite Radio and Sirius Satellite Radio announced they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger. Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of Sirius common stock for each share of XM. XM and Sirius shareholders will each own approximately 50 percent of the combined company.

The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending timely regulatory approval, the companies expect the transaction to be completed by the end of 2007.

The companies filed their Merger Agreement with the Securities and Exchange Commission on February 21, 2007.

Business Outlook

XM Satellite Radio reaffirmed the following financial guidance for the full-year 2007:


* Subscribers between 9.0 million and 9.2 million with higher seasonal
growth expected to occur in the latter part of the year;

* Subscription revenue in the 1 billion dollar range; and

* Improved cash flow from operations in 2007. Full-year positive cash
flow from operations in 2008.

The company has made the following refinements to its prior guidance for the full-year 2007:


* CPGA in the range of $111-$114; and

* Adjusted operating loss, excluding any merger-related or legal
settlement costs, in the range of $170 million to $180 million.

Webcast and Conference Call Information

Gary Parsons, chairman, Hugh Panero, chief executive officer and Nate Davis, president and chief operating officer, will host an earnings conference call to discuss XM Satellite Radio's 2007 first quarter results today, Thursday, April 26, 2007, at 10:00 AM Eastern Time. Prior to the call, you can access XM Radio's first quarter 2007 results on the Company's website at http://www.xmradio.com. To listen to the conference call via telephone, please call one of the following numbers approximately 10 minutes prior to the planned start of the call:


* Call-in number: (877) 265-5808
* Local call-in number: (706) 679-7931
* Conference ID#: 5409333

The conference call can also be accessed through a live webcast on the Company's website at http://www.xmradio.com/ (click on "Investor Info" link at the bottom of the page). The webcast of the call will also be archived on the Company's Web site.

If you are unable to participate in the scheduled call, a replay of the conference call will be available after 11:30 a.m. ET on Thursday, April 26, 2007 until July 26, 2007. You can access the replay of the conference call via the following numbers:


* Playback Numbers: (800) 642-1687
* Local playback number: (706) 645-9291
* Conference ID#: 5409333

4/26/2007 08:38:00 AM


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Bridge Ratings, Updated April 25th

Digital Media Growth Projections - Updated 04/25/2007
Internet Radio Growth Booming
Satellite Radio Interest Softens Further
HD Radio Growth Re-forecasted Down
New Category Gaining Momentum: Cell Phone Listeners

As part of Bridge Ratings' on-going study of audience attrition of traditional radio and subscriber and user growth of alternative digital media, we now publish quarterly insight comparing projected use and growth. Included here is an update to our findings published since March of 2005
I. Internet Radio
Internet radio continues to show the most significant growth of monthly users of those media we cover in this analysis. At the conclusion of 2006, we estimate that 24% of the U.S. population or 72 million Americans listened to on-line radio in the previous 30 days. In this newest update of the report 25% have listened in the previous 30 days. Weekly listening has also climbed with 19% of the sample listening to some form of Internet radio in the previous 7 days up to 57 million per week.
We are estimating that at the conclusion of 2007, monthly Internet radio listening will reach 31% of the U.S. population jumping to 38% by the end of 2008...read more: here

4/26/2007 06:09:00 AM


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Wednesday, April 25, 2007

XM Introduces 2 New Receivers

April 25, 2007

Audiovox has 2 new receivers anticipated to be available in June of 2007. The receivers are plug and play units and are the Audiovox Xpress EZ and Xpress Replay. If you want to see what these beauties look like visit Orbitcast HERE

4/25/2007 10:14:00 PM


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Morgan Stanley on SDARS and NPD

April 25, 2007

Mar NPD Results: 30% YoY Declines In-Line with forecast

· Quick Comment: NPD satellite radio point-of-sales data released today shows retail category sales declined just below 30% YoY in March, implying 35% YoY category declines for 1Q07 (see Exhibit 1). The 35% declines reported for 1Q07 compares to our forecast of retail gross additions declining 30% in 1Q07 and 9% YoY in FY07E. XMSR also gained over 300 bps of market share over SIRI in March, while experiencing less severe YoY declines in the month and 1Q07. For the quarter, XMSR retail sales declined roughly 30% YoY compared to 40% for SIRI. We note YoY category sales trends could be better than shown by NPD as NPD excludes point-of-sales data from major wholesale retailers (i.e. Wal-Mart and Costco) and direct sales where both satellite radio operators have aggressively ramped their presence. As noted in previous research, we believe FY07 category sales will strongly rely on both operators’ ability to address potential consumer confusion stemming from the pending XMSR-SIRI merger.

· Implications: The 1Q07 NPD retail results are in line with our existing 1Q07 retail gross additions forecast. We expect total net adds for XMSR and SIRI to be 270K and 550K for 1Q07. As we head into 2Q07, we will begin to exit the YoY “Howard Stern” comps and we expect YoY declines to continue to moderate. We point out that January NPD sales were down 45%, February down 33%, and March just under 30%. For the full year, we expect category retail gross additions to be down approximately 10% - which implies a modest recovery in sales in 2H07 and in particular 4Q07.

While not necessarily indicative of long-term trends, XM had its best market share month (47%) since August ‘05. XM likely benefited from the lead into the Major League Baseball season, which began in early April.

4/25/2007 06:15:00 PM


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March NPD Retail Outshines February

April 25, 2007

As we reported here, the NPD Data is out.

Ever since the merger was announced, there has been a worry that retail would suffer due to uncertainty.

Well, according to the NPD data, those worries seem to have been overdone. In fact, NPD sales in March were STRONGER than February, which is quite telling because the merger was not announced until February 19th.

In a time period where there seems to be a lot of negative attention surrounding SDARS, the retail news is a breath of fresh air. Consumers, who many feared would remain on the sidelines, actually increased their SDARS purchases over February.

From an investors perspective, stability at retail in combination with increased OEM penetration could be a spark for the sector. Now more than ever, the conference calls for Q1 2007 become a major event for the sector.

News surrounding the retail numbers seemed to be the driver for some share price movement this afternoon. As this information becomes more widely available, it will be interesting to see the reaction of the street.

Stay tuned.

4/25/2007 03:05:00 PM


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March 2007 NPD Data Released

April 25, 2007

March 2007 Retail sales, as tracked by NPD are in. (CLICK CHART TO ENLARGE)

MARKET SHARE

SIRIUS – 53%

XMSR – 44%

This represents 19 consecutive months that Sirius has maintained a lead at NPD retail. The market share for XM improved 3 points over the data from February.

YEAR OVER YEAR

SIRIUS YOY for March is down 33%

XM YOY for March is down 22%

SEQUENTIAL MONTH OVER MONTH

SIRIUS – Down 4% from last month

XM – Up 10% from last month

March was weaker than February in sales in 2006. This was the case for both Sirius as well as XM. As a sector, this data would seem to indicate a stable retail with XM showing some upside happening. While retail numbers are weaker than last year, both Sirius and XM seem to be offsetting the drop in retail with OEM installs.

Initially there was some worry about how the merger announcement would impact retail. Given the data, it appears that consumers are not holding back and waiting, and that the marketing campaigns of XM and Sirius have been effective in maintaining retail subscriber levels. Overall, satellite radio sales were HIGHER in march than in February....something that was not the case in 2006.

With retail seeming to be stable, one worry for investors in this sector seems to now have an answer.

CORRECTED - Share is 53% SIRI and 47% XM (reported 54/48 earlier)
YTD 55% SIRI and 45% XM (reported 54/46 earlier)

4/25/2007 02:43:00 PM


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Options On XM Geeting Attention

April 25, 2007

From Briefing.com

XMSR calls are seeing interest ahead of tomorrow's (4/26) before the open. Seeing the most action are the May 12.5 calls (volume: 6960, open int: 4760, implied vol: ~57%, prev day implied vol: 50%) -- the Jul 12.5 calls are also seeing interest;

4/25/2007 01:54:00 PM


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Deutsche Bank On SDARS

April 25, 2007

Deutsche Bank - Equity Research


Trimming TPs on lower 2008 ests, but keeping Buys and merger ests

We continue to see the prospect of a merger as a fairly good proposition, and believe that pro forma synergies of close to $400m per year are reasonable. We maintain our 1Q net sub addition estimate of 214k for XMSR, while fine-tuning our SIRI 1Q estimate to 400k from 420k. Retail category trends down 30-40% YTD make us more cautious on our 2008 retail category growth estimate, which we lower to 3% from 8%. We rate both SIRI and XMSR Buys as plays on economical growth in satellite radio, in particular in U.S.
vehicles.

Retail is weak, but in line with our expectations

We believe the satellite radio retail category is tracking down roughly 35% YTD. Coming out of 4Q reporting, we only expected 214k net subscriber additions for XM (down 62% YoY), and actually believe the company should beat this number. While Sirius is more dependent on retail for growth, we believe that strong growth in installations at Ford is largely making up for slack at retail.

Still see merger deal as possible proposition, with synergies of about $4.6bn

In our discussions, arbitrageurs and investors continue to view the antitrust analysis for the merger as complicated, and we agree (see the prior, extensive discussion in our noted dated January 31, 2007 titled "After further review ... still not counting on a merger.") We hear chances of approval in our conversations ranging from 25%- 75%, which frankly seem above the probability implied by current prices. We are fairly comfortable with our synergy estimate, which includes some estimated reductions in programming costs, although we assume no reductions in music royalties or marquee programming rights deals.

Fine-tuning TPs: to $18 from $22 for XMSR, and to $4.75 from $5.25 for SIRI

While our 2007 operating estimates are essentially unchanged, we are lowering our 2008 estimates to reflect 1) essentially no retail market growth in 2008, partially offset by 2) higher installation rate assumptions for the some of the key OEM partners of both companies. Absent a merger, we believe that the retail market in 2008 will benefit primarily from the indirect impact of more OEM subscribers, who may decide to subscribe to additional units once they have used the product. This will have to offset the drags from increasing penetration of the core customer base and increasing competition from other audio music devices. Our XMSR DCF assumes 14.5m XMSR subs by 2010, 30.1m by 2020, a 4% TVG and 14% WACC (resulting in c.$13 per share standalone value) and merger analysis assuming $4.6bn in synergies and a 50% probability of deal completion with few material conditions. Our SIRI target price is based on a DCF assuming 14.1m Sirius subs by 2010, 28.1m by 2020, a 4% TVG and 14% WACC (resulting in c.$4.25 per share standalone value) and merger analysis assuming $4.6bn in synergies and 50% probability of deal completion with few material conditions. Risks to both ratings include changing market for technology-driven businesses, subscriber growth volatility, competing
technologies, rising costs, liquidity, and adverse legal developments (including failure to gain merger approval).

4/25/2007 12:54:00 PM


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Short Interest In SDARS

April 25, 2007

Seems a popular trade these days is to short SDARS. Those that took this path have nothing to complain about at this point. They have made a nice return on their investment decision. The question at this point is how long the short interest will remain a player in SDARS.

..................APRIL 15................MARCH 15.................CHANGE

SIRIUS..120,435,858.............123,631,119...............-3,195,261

XM...........30,854,117...............31,202,313..................-348,196

There has been a very slight decline in short interest, but clearly the shorts have not vacated that position en mass. With earnings coming up tomorrow for XM and next Tuesday for Sirius, it will be interesting to see what the play is.

Perhaps more interesting than the short position is the number of people sitting on the sidelines. These investors are simply waiting and observing at this point. If selling stops and capitulation happens, these equities could be very interesting to watch. The conference calls could give an indication that each group is looking for. Average calls likely means the status quo....drifting equities. Positive calls could bring new money into these equities. Negative calls give the shorts all the ammunition they need. As long as sentiment in this sector remains at the current levels, there is no reason for any particular group to change strategy, and right now, uncertainty rules the day.

XM will set the stage tomorrow. Watch street reaction closely.

4/25/2007 11:32:00 AM


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XM Q1 Preview

We here at SSG are not analysts, nor do we profess to be analysts. We do however review a lot of documentation and try to interpret what we see in the reports to arrive at our own estimation.

The XM Q1 2007 conference call will be happening tomorrow. There are a few items that we see that have potential to impact the EPS. While none of the make a huge impact, they should be looked or at least known by investors interested in this sector.

The first item relates to the merger. XM is the company that is being acquired. Therefore any costs related to the merger would be expensed in the quarter in which the activity occurred. This differs from Sirius, the acquiring company who’s costs are capitalized. Thus, these expenses for XM will show up in total as they are expended.

The next item that needs to be addressed is the method of counting OEM subscribers for non GM and Honda cars. As you may be aware, installs in Toyota, Nissan, and Hyundai are not counted as subscribers during the trial period. These 3 auto makers sold roughly 1,000,000 cars in Q1. If we were to assume a 10% install rate, that would mean that there are 100,000 cars receiving XM that are not yet counted as subscribers. The COSTS of these installs would be booked in Q1, but because these installs are not counted as subscribers, the GROSS subscriber number used to calculate SAC and CPGA do not include them. This is important because investors need to be aware of how this impacts these numbers.

By example, if each of these installs cost $100, then there would be $10,000,000 of expense. How does this impact the metric????? If the gross number of subscribers comes in at 950,000 and we assume a $100 cost to each sub, then the CPGA would be $95,000,000. However, if we add in the investment into the Toyota, Nissan, and Hyundai line of $10,000,000 we will have expenses $105,000,000, and instead of the CPGA being $100, it would rise to a bit above $110. There is nothing wrong with what XM is doing at all. It just needs to be understood by investors that there is an investment into future subscribers that is skewing the CPGA at this point. In time, this situation will balance out, but the learning curve has to happen at some point. This is why we always suggest going far deeper than simply the reported number. At this point the tradional XM definition of CPGA and SAC has changed and investors need to consider this as they look at the numbers.

With that being said, here is what I am expecting in the Q1 call from XM:

SUBSCRIBERS

I am expecting GROSS subscriber additions to be in the area of 930,000. In my opinion, 580,000 will come from the OEM channel and 350,000 will come from the retail channel.

On a NET basis, I would anticipate deactivations of 660,000, bringing the NET number to 270,000. A potential upside to this number can be arrived at by a stronger performance in March at retail. If that happened, a NET number of 290,000 could be reasonable. Based on that I would throw my estimate in at 285,000 for NET Subscribers.

CHURN

The popular number for XM’s reported churn number seems to be between 1.9% and 2.1%. I feel this is reasonable. Investors need to remember that the reported churn of XM does not include all deactivations. Subscribers coming off of a promotional period that decide against keeping the service are not calculated in the churn metric that XM reports. My estimation for fully loaded churn is at 3.0% (slightly higher than last year). I bumped up the number slightly because the increased penetration into the OEM sector and installations into car models that attract consumers that may be less likely to keep satellite radio.

EPS

It would appear that the street is looking for a loss of 39 or 40 cents per share, with the popular “Whisper numbers” having a the loss at 45 cents. However, there are many analysts that have not done revisions since the merger announcement. What is an investor to believe? Your guess is as good as mine. XM has demonstrated cost controls of late, and has been very aggressive on that front. I would tend to lean to them beating the street by a slight margin. Perhaps 38 cents per share.

REVENUE

My estimate - $268,000,000

SAC/CPGA

My estimate $68 / $109

In the end, the losses will narrow, and the overall tenor of the call should be well received. There has actually been quite a bit of positive news from XM in the quarter, but sentiment seems overly focused on negatives. I would hope to see some flavor on how the non GAAP metrics are calculated, but that may not happen this quarter. At this point investors need something they can wrap their hands around. Please remember that we are not financial advisors, and the information in this piece is only my opinion. I encourage investors to look at as much information as possible.

4/25/2007 11:17:00 AM


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XM Expands Weather Service

XM WX Satellite Weather service expands
Apr 24, via www.orbitcast.com

XM Satellite Radio has announced that it will enhance its popular XM WX Weather package (most people just call it XM Weather), adding more features at no additional charge. "We're excited to announce the expansion of coverage to Canada and Puerto Rico," said XM spokesman Roderick MacKenzie at the Sun 'n Fun Fly-In in Lakeland, Fla.
XM WX Weather will include Canadian weather products such as Weather Warnings, Outlooks, METARs, SIGMETs, and winds aloft. And who doesn't need METARs, SIGMETs and winds aloft? I know I sure can't live without 'em.XM also said it will offer subscribers an "End of Season" package that allows them to put their payments on hold during the off-season when they don't need the service. It's not being thrifty, it's called common sense....read more: here

4/25/2007 06:15:00 AM


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Seeking Alpha: Satellite Radio Has No Match

Merger Speculation Hurting Sirius Stock, Long Term Outlook Still Good
Posted on Apr 25th, 2007 with stocks: SIRI

Investor Trip submits: Analyst downgrades sent Sirius Satellite Radio (SIRI) shares into a downward spiral since April 20th, 2007. Both USB and Stanford analysts downgraded SIRI shares from “buy” to “neutral”, and Wall street took quick notice. The SIRI-XM Satellite Radio (XMSR) Merger speculation causes SIRI shares to degrade in value as time passes. Investors become impatient and dump off their shares, causing a sell-off when the merger details have changed very little.
I’m Down 18% in SIRI stake
I opened half my long position in Sirius Satellite Radio Inc. at $3.20 when Sirius stock appeared to have bottomed. I made a mistake in judgement because I didn’t account for speculative merger talks in my preliminary analysis. Now, I’m down 18% on this stock, and may have to sell off my position if it reaches my 25% stop-loss limit.
Even when your analysis looks 100% correct, short term movements can disrupt your objective thinking. However, a 25% stop-loss limit helps to automate decisions and ease the pain...read more: here

4/25/2007 06:09:00 AM


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National Black Chamber Of Commerece Endorses SIRI+XM Merger

Tuesday, April 24, 2007, via SatelliteRadioTechWorld

National Black Chamber of Commerce Endorses Merger
The National Black Chamber of Commerce, representing 95,000 black owned businesses, came out in support of the merger between XM and Sirius, stating that satellite radio has been critical to the programming needs of African Americans. We didn't realize this, but they state that the "medium offers dozens of channels that are targeted to the programming needs of African American entrepreneurs, entertainers, and consumers." That's the great promise of satellite radio to offer a wide range of programming to meet the needs of a varied audience...read more: here

4/25/2007 06:05:00 AM


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Tuesday, April 24, 2007

The Original Italian Pie Gets Sirius

April 24, 2007

The Original Italian Pie Jazzes Up New Orleans with SIRIUS

Slidell, LA-based The Original Italian Pie, renowned for their gourmet pizzas and Italian specialties with a New Orleans kick, has announced that it has chosen SIRIUS Satellite Radio as the background music for its restaurants. Under the agreement, Applied Media Technologies Corporation will furnish The Original Italian Pie’s restaurants with commercial sound systems, as well as 69 channels of commercial-free music provided by SIRIUS Satellite Radio.

"As a fellow Gulf Coast Region-based business, we know how severe the weather can get. In addition to providing music with no contracts, SIRIUS Satellite Radio is unaffected by even the worst weather conditions, unlike dish-based services such as Muzak," said Dan Hecht, Director of Special Programs for Applied Media Technologies Corporation.

Pat Linch, Director of Operations for The Original Italian Pie added, "Our restaurants, voted as having the best pizza in New Orleans, are always looking for ways to further improve our diners’ experience. At $24.95 per month with no contracts, SIRIUS Satellite Radio provides our franchisees the best music around at a great value!"

Based in Slidell, LA, The Original Italian Pie was founded in New Orleans in 1992 and has experienced rapid expansion, with 22 units now open in nine markets across the southern states. Additional units are in various stages of development in various markets. Franchise information and maps and menus for each location can be found on online at www.italianpie.com.
Privately-held AMTC is headquartered in Clearwater, FL. AMTC is the provider of SIRIUS Satellite Radio (NASDAQ: SIRI) for business use, under the brand name SIRIUSBusiness. SIRIUSBusiness includes 69 channels of 24-hour, commercial-free music, with all music royalties paid, and presents the first meaningful competition for Muzak in the business music arena. AMTC also manufactures a full line of professional sound equipment and provides TelAdvantage, the world’s most recognized brand of telephone "on hold" messaging products and services. Since 1991, AMTC has served over 20,000 customers around the globe, including names like Bally Total Fitness, Bridgestone-Firestone, Continental Airlines, DaimlerChrysler, Ford Motor Company, Morgan Stanley, Wendy's and Yum! Brands. For further information on SIRIUSBusiness or TelAdvantage, visit www.amtc.com.

4/24/2007 10:05:00 PM


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Onkyo Gets Sirius And XM And HD And AM And FM


April 24, 2004,

Thanks to the guys at Sirius Uplink via Gizmodo, we have a look at a new piece of satellite radio hardware!!!!

Onkyo has introduced the T-4555P. A highly capable unit that brings many competitors into one mean piece of hardware.

I have always been a fan of Onkyo. They deliver a quality product at a reasonable price, and now, for $499 you can have Sirius, XM, HD, AM, and FM all in one stereo component.
Hardware news surrounding satellite radio in 2007 has been very light, so it is with welcomed ears that the Onkyo T-4555P comes to town.
Happy listening

4/24/2007 09:32:00 PM


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Patron Saints of Payola - The NAB - Try To Shift Focus

April 24, 2007

The NAB, Patron Saint's of Payola, want to fight the merger on any front possible.....even if it has nothing to do with the merger.

NAB issued the following bulletin today:

XM's "rogue" antennas raise questions about Sirius merger In an FCC filing, XM Satellite Radio admitted that as much as 42% of its network is served by antennas in violation of FCC rules, either because they are in unapproved locations or their signals are too strong. News of the violations irked U.S. Rep. Edward Markey, D-Mass., who chairs the House Telecommunications and Internet Subcommittee. Markey issued a public statement saying, "What is the expectation [XM Radio] will follow through or fulfill any public interest conditions?"

So, now the NAB seems to have Congressman Markey on their side. If you want to let Congressmen Markey know how you feel about the merger, please see the contact information HERE . Please remember to be respectful and courtious.....take a higher road than the NAB.

4/24/2007 01:06:00 PM


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Wedbush On XM

William Kidd, of Wedbush, published the following XM preview comments:

HOLD rating and $15 target:

We are expecting XM’s Q1 results to be in line with relatively low expectations; consequently, we do not expect the results to rally much investor interest. Retail gross additions will likely be the story this quarter. We are expecting retail demand (e.g., gross additions) to be weak, though XM may have gained a couple points of market share back from Sirius. Improving OEM sales should help offset some of the weakness. For the quarter, we are making a minor adjustment to our retail gross adds estimate, lowering it to 328k from 333k. The net result is that we are still expecting a 36% yoy decline in retail gross additions, which seems to be supported by recent NPD data. By mid-year, we expect OEM sales to make an even greater contribution, which should help lessen the sting from soft retail sales. Having said that, OEM demand is likely still the positive force in Q1, but not of a sufficient magnitude to offset the retail woes. The challenge with the OEM side is that we have less visibility, especially compared to retail, making the potential positives in Q1 more speculative than the negatives.

• We are forecasting Q1 net additions of 294k, a touch lower than our original estimate of 303k. We believe the consensus to be in the high 200’s. We do not view the difference as material. Bear in mind, XM will likely continue to report dramatically lower net additions figurers compared to Sirius because of its larger replacement churn burden. We think this cosmetic difference will continue to be a marketing challenge for XM management.

• We are not expecting subscriber guidance adjustments to resurrect the quarter. We believe XM is on its way to reaching its 2007 subscriber guidance of 9.0-9.2 million subscribers, up from 7.63 at year-end 2006. Although we’re not expecting any positive guidance changes, we believe it is not inconceivable that XM could tighten/drop the high-end of its guidance range, though we are not counting on that. We are at 9 million year-end subscribers for 2007. In terms of other key metrics: we are at $975 million for revenue, a bit more conservative than the company’s $1 billion guidance, and we are at $117 in CPGA relative to the company’s flat-to-higher CPGA guidance (from 2006’s $105).

• Although our $15 price target remains unchanged due to rounding, we note that minor changes to our model have resulted in a decrease of $162 million ($0.48 per share) in our target valuation. FYE DEC 2006A 2007E 2008E

4/24/2007 12:41:00 PM


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Wedbush On Sirius

April 24, 2007

William Kidd of Wedbush published the following 1Q preview comments for SIRIUS:

BUY rating and $5 target:

• We are expecting retail demand to be weak for Q1, not only due to the prevailing retail downtrend but also because XM may have gained a couple points of market share back from Sirius. We believe that XM’s higher guided SAC spending for 2007 reflects the company’s active attempt to regain some market share through additional spending. In addition to such competitive factors, Howard Stern’s arrival in 1Q06 makes yoy comparisons difficult from the get go for Sirius. And unfortunately for Sirius, we believe NASCAR recent addition was not significant enough to making a meaningful impact. Even though improving OEM sales should help offset some of the weakness, we are concerned that demand could come in somewhat less than expected. Accordingly, we are lowering our Q1 gross additions (which include OEM) to 876k from 912k. The net result is that we are expecting a 35% yoy decline in retail gross additions, which also seems consistent with NPD data.

• Trimming Q1 and Q2 net additions. Because of XM’s market share gains and a smaller than expected NASCAR bump, we are now forecasting Q1 net additions of 496k, slightly lower than our original estimate of 532k. We think our revised estimate is in line with the consensus. Interestingly, we had some concern that some consumers would be confused by the merger and possibly reluctant to purchase satellite radio for the time being, but channel checks indicated that consumer confusion does not seem to be a serious issue. We also felt compelled to address our Q2 estimates for Sirius on the same rationale. For Q2, we lowered our net additions to 427k compared from 470k. The net result is that our 2007 net adds estimate now stands at 2.1 million down from 2.2 million. Due to these changes, our Sirius valuation declined by $449 million ($0.25 per share). However, because of rounding, our price target remains unchanged at $5.

• We are not expecting any changes to guidance or an EPS surprise. We believe Sirius is on its way to reaching its 2007 subscriber guidance of >8 million subscribers, up from 6.02 million at year-end 2006. We are at 8 million year-end subscribers for 2007. In terms of other key metrics: we are at $987 million for revenue, a bit more conservative than the company’s $1 billion guidance, and we are at $103 in SAC relative to the company’s SAC guidance of $95. Our Q1 EPS estimate of ($0.12) is a penny below the ($0.11) consensus.

• The merger approval process and a difficult first-half 2007 continue to overshadow the company’s valuation and a stronger second-half outlook. For now, we think concerns of a soft Q1 coupled with a bleak07E 2008E EPS($) ACTUAL CURRENT PREVIOUS CURRENT PREVIOUS merger outlook have put considerable pressure on the company’s shares. If there were a positive this quarter, it would be that much of the company’s negative news flow may be behind it. It would not be surprising to see another revision of negative revisions to long-term estimates in the aftermath of Q1 results. If capitulation does occur, we think it might finally be time to start for more investors to more seriously consider accumulating satellite radio equities, as the merger overhang and soft subscriber results probably won’t last very long.

• The merger decision, which we expect in the August/September timeframe, remains the largest milestone still ahead of the company. Either way, we see that date as a potential catalyst. If regulators deny the merger, which we think is likely, we believe investors would be willing to own Sirius, since they would no longer have to be concerned with how the merger process could drag on. Conversely, although we do not think merger approval is likely, we would imagine that the company’s outlook, and thus its share price, would be considerably brighter with merger synergies included.

• Risks to attainment of our share price target include shortfalls in subscriber growth; increased competition whether from XM; AM/FM radio, HD Radio, or streaming-media services; new/increased government regulation; a prolonged and/or failed merger attempt; an inability to renew key content and OEM contracts; satellite anomalies; and an unfavorable outcome in the ongoing arbitration process with record labels over royalty rates.

4/24/2007 12:35:00 PM


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Stanford On XM - More Detail

April 24, 2007

XM 1Q additions 250,000, rated HOLD $10 target

XMSR: Soft Q1 retail subscriber additions.


· XM will release first quarter 2007 results Thursday morning. We estimate XM may add 250,000 new net subscribers as retail additions remain soft. We are lowering our target from $18 to $10 to reflect the soft satellite radio subscriber growth.

· Management will host a conference call at 10am Thursday, April 26th. The dial-in number is 877-265-5808. We suspect “Street” estimates are calling for 289,000 net additions in the first quarter. Our estimated 250,000 net additions bring total subscribers to 7.9 million, up 21% year over year.

· Despite modest subscriber growth, XM could show decent financial performance. Revenue could be $248 million, up 19%, leading to an adjusted ebitda loss $4.5 million. EPS loss may be $0.34, an improvement from a $0.60 loss a year ago.

· XM struggled with weak retail sales in the face of increased competition. 2006 demonstrated Sirius’ market share advantage via retail, which we believe Sirius has maintained.

· XM and Sirius have proposed a merger of equals. XM holders will receive 4.6 shares of Sirius stock for each XM share they hold. While a satellite radio merger could uncover substantial cost savings, it may take six months to hear from regulators and well into next year to start unlocking merger synergies.

· The merger faces significant regulatory scrutiny from the Federal Communications Commission and the Department of Justice. Stanford policy analyst Paul Gallant believes there is a 60% chance the DOJ will sue to block the merger. The transaction is slated to close by yearend.

· For 2007, we project 1.2 million net subscriber additions (versus the “Street” at 1.5 million) bringing the total to 8.8 million, up 16%. Our 2007 revenue estimate is $1,038 million, up 11%, leading to adjusted ebitda loss of $3 million and an EPS loss of $1.32.

· XM’s stock currently implies a valuation of $530 for each 2007E subscriber and 5x 2007E revenue. By comparison, Sirius’ valuation implies $640 per subscriber and 5x 2007E revenue. But, Sirius is growing subscribers and revenue substantially faster. Our valuation is based on the present value of future subscriber growth and free cash flow potential. Our target price is $10 per share.

· We rate XM Satellite Radio a Hold.

4/24/2007 12:33:00 PM


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Stanford On SIRI - More Detail

April 24, 2007

Fred Moran of Stanford downgraded SIRUS today to HOLD with a $3 target, 1Q sub additions 420,000:

Sirius Satellite Radio Inc. (SIRI-Hold, $2.80 Target $3.00)

SIRI: Soft growth, no catalyst.

· Sirius will report first quarter 2007 results on Tuesday morning, May 1st. We estimate Sirius may add 420,000 net additions during the first quarter. We are lowering our rating to Hold and our target from $5 to $3 to reflect the soft satellite radio subscriber growth.

· Management will host an 8:00am ET conference call on Tuesday, May 1st. The dial-in number is 800-819-9193.

· Sirius could end the first quarter with 6.4 million subscribers, up 58% year over year. Sirius should continue to lead the satellite radio industry in subscriber growth, but Sirius’ 2007 subscriber growth could drop to 34% year over year.

· We estimate first quarter revenue of $215 million, up 69%. Cost per gross add could rise to $121 causing a first quarter oibda loss of $47 million and an EPS loss of $0.09.

· XM and Sirius have proposed a merger of equals. XM holders will receive 4.6 shares of Sirius stock for each XM share they hold. While a satellite radio merger could uncover substantial cost savings, it may take six months to hear from regulators and well into next year to start unlocking merger synergies.

· The merger faces significant regulatory scrutiny from the Federal Communications Commission and the Department of Justice. Stanford policy analyst Paul Gallant believes there is a 60% chance the DOJ will sue to block the merger. The transaction is slated to close by yearend.

· Our 2007 estimates forecast $959 million of revenue and oibda loss of $178 million. EPS may be a loss of $0.37. For 2007, we estimate that Sirius could add 2.1 million subscribers, bringing its total to 8.1 million, up 34%.

· Our new $3 price target reflects more moderate near-term growth in satellite radio. Sirius trades at 5x 2007 estimated revenue and $640 per our 2007 subscriber estimate of 8.1 million. By comparison, XM’s valuation implies $530 per subscriber and 5x 2007E revenue. Our valuation is based on the present value of future subscriber growth and free cash flow potential.

· We rate Sirius Satellite Radio a Hold.

4/24/2007 12:32:00 PM


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Stanford Downgrades XM

April 24, 2007

Stanford has downgraded XM, loweing the target price from $18 to $10.

More details to follow

4/24/2007 11:30:00 AM


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Stanford Downgrades Sirius

April 24, 2007

In a report issued today, Stanford downgraded Sirius from BUY to HOLD.

More details to follow

EDIT - we incorrectly labeled this as Sanford. It should have bee Stanford

4/24/2007 09:45:00 AM


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Mercedes Gets More Sirius

April 24, 2007

Mercedes-Benz to Offer SIRIUS Satellite Radio in More Than 80 Percent of Its Vehicles

SIRIUS added as standard equipment on S-Class and CLS


MONTVALE, N.J. and NEW YORK, April 24 /PRNewswire-FirstCall/ -- Mercedes- Benz, USA and SIRIUS Satellite Radio (Nasdaq: SIRI - News) today announced that Mercedes-Benz USA (MBUSA) plans to significantly increase the rate at which they install SIRIUS radios in Mercedes-Benz vehicles to more than 80 percent for 2007, with plans to continue building to 90 percent for 2008 and over 90 percent by 2009. The growth in the installation rate far exceeds earlier estimates of 50 percent that were set less than two years ago.

The luxury automaker also plans to offer SIRIUS as standard equipment on two additional models this year the S-Class and CLS. The new models will become available with SIRIUS at dealerships later this year. SIRIUS is currently standard in Mercedes-Benz's SL-Class and CL-Class model vehicles, and all AMG and 600 model vehicles.

"Mercedes-Benz customers enjoy SIRIUS' unique radio programming, including commercial-free music, news, information and the best sports programming," said Bernard Glaser, general manager of product management for MBUSA. "It is the perfect complement to the Mercedes-Benz driving experience."

"We are happy to see SIRIUS go standard across so many Mercedes-Benz vehicle models. Mercedes-Benz continues to be a great partner in driving the growth of SIRIUS," said Mel Karmazin, Chief Executive Officer of SIRIUS. "With these increased installation rates, now more Mercedes-Benz drivers will get to experience for themselves The Best Radio on Radio."

Mercedes-Benz continues to offer SIRIUS in its vehicles complete with six months of SIRIUS service.

4/24/2007 09:17:00 AM


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Amazon To Sell Unprotected Music

Amazon To Sell Unprotected Songs
Robert Andrews 04.23.07, 12:58 PM ET , Forbes

Sources in the London Times say Amazon has approached all the major labels "in the past fortnight" and stated its desire to launch an online music store by May. The Times said the store would offer "unprotected MP3s."
Billboard last week reported on Amazon's moves to enter the emergent space that will already be occupied by Apple and EMI's new DRM-free repertoire, also due in May. The Times joins the dots and suggests EMI tunes would logically be among Amazon's first offerings.
But the Times pressed undo on one of Billboard's assertions: "Speculation that Vivendi’s Universal Music was already signed up to test classical MP3 downloads is understood to be wide off the mark."
It adds: "Amazon's efforts have been held back by various problems. It originally wanted to launch its own music player to rival the iPod in tandem with the store and held discussions with manufacturers, but these failed to develop successfully."...read more: here

4/24/2007 06:37:00 AM


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Howard Stern Takes Peep Show On The Road

HOWARD TO HORN IN ON TIMES SQ.
By DON KAPLAN, April 23, 2007, New York Post

Howard Stern is bringing smut back to Times Square, at least for a day.
The satellite-radio shock jock converted an old milk truck to accommodate video booths playing porno-themed programming.
On Wednesday, Stern plans to have his mobile peep show parked on 42nd Street at 11 a.m. in front of Madame Tussaud's wax museum - 180 feet from the New Amsterdam Theater, where the Disney musical "Mary Poppins" is being performed. The stunt is aimed at promoting a free Internet preview this week of Stern's pay-cable service, which provides uncensored material from his show.
Stern regular Doug Goodstein says that the booths won't feature any hardcore pornography, but naughty bits filmed during Stern's show. Visitors will have to be at least 18 years old...read more: here

4/24/2007 06:22:00 AM


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Competition Alert: Best Buy To Stock HD Radio

Best Buy Chain Dials Into Selling High-Def Radios
Monday April 23, 7:00 pm ET Patrick Seitz. Investor's Business Daily

Adoption of HD Radio, the digital upgrade to today's analog AM-FM broadcasts, could get a big lift from Best Buy's decision to stock HD Radio receivers in all of its stores nationwide.
Best Buy (NYSE:BBY - News), the No. 1 consumer electronics retailer in the U.S., announced Monday that it's selling HD Radio receivers in all its 832 stores nationally. Best Buy is the first national retailer to make HD Radio technology available to customers across the country. Other retailers, such as Wal-Mart (NYSE:WMT - News), Circuit City (NYSE:CC - News) and RadioShack (NYSE:RSH - News), are starting to roll out HD Radio products as well...read more: here

4/24/2007 06:18:00 AM


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Monday, April 23, 2007

Sirius Annual Meeting Set

April 23, 2007

Sirius filed paperwork with the SEC today announcing their annual meeting. The meeting is scheduled to take place on May 24, 2007 at 9:00 a.m., New York City time, in The Auditorium at The Equitable Center, 787 Seventh Avenue, New York, New York 10019.

Shareholder of record on April 5, 2007 can vote at the meeting.


4/23/2007 09:48:00 PM


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Forbes - Do they Understand The Merger?

April 23, 2007

On a day when the SDARS equities are taking a hit, it is no surprise to see that reporters are jumping on the wagon of coverage. What is surprising is that Forbes today published a video featuring Michelle Steel to talk a bit about the merger, and the reporter clearly erred in the buyout terms of the merger. Not only that, but the Forbes Staff writer she interviewed made no effort to correct her.

Michelle

"Welcome to the Forbes Video Network. We're taking a closer look now at the potential merger between XM and Sirius Satellite Radio. Matthew Kirdahy has tuned in, he's a staff writer at Forbes.com and he knows all about it. Now Matthew, I want to first start out with the share price here.....Now XM Satellite is trading at about $11 and change but the buyout offer is $17 so it sounds like the market is saying, 'this aint gonna happen', whats the analyst community saying?"

Matthew

"The analysts are saying just that, their sharing the pessimism of the investors and we have one analyst saying that the chances are not very good....well two actually, one 11% about and the other lower than 35%."

The interview continues on.......BUT

Where has there ever been an offer for $17????

There hasn't.

The offer is very plain and very simple. 4.6 shares of Sirius for each share of XM. Simply stated, this is an offer for shares....not dollars. The value of an XM share will be determined by the PPS of Sirius. The analysts referred to in the report clearly speak to how the offer is structured in their reports issued today. One has to wonder whether or not the people at Forbes even read the reports that they refer to. How does Forbes miss this?????

While there is indeed a way to value the price of XM in a merger, it is arrived at by calculating the value of 4.6 shares of Sirius. This is the most basic part of the merger. How can a discussion, produced into a video, miss this???? It is actually amazing!!!!!

Now, sentiment regarding the possibility of a merger is low in many circles, and this is reflected in the share price of both equities. Investors should give due consideration as to the prospects of the merger passing when making an investment decision. However, investors should understand the merger prior to making a decision as well......and this Forbes video does not represent the merger accurately at all.

We are not saying that the merger will pass or fail, we are simply saying that getting the information correct in the first place is a very important factor as you consider this sector.

Readers can see the Forbes video HERE

4/23/2007 03:18:00 PM


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NFL Draft Gets Sirius

April 23, 2007

Sirius Satellite Radio to Provide Comprehensive Live Coverage of the 2007 NFL Draft

SIRIUS NFL Radio channel to broadcast live April 28-29 from NFL Draft Headquarters at Radio City Music Hall in New York City

Listeners will hear complete gavel-to-gavel coverage of all seven rounds with expert analysis from SIRIUS' Draft experts Gil Brandt, Pat Kirwan and others

NEW YORK, April 23 /PRNewswire-FirstCall/ -- SIRIUS Satellite Radio (Nasdaq: SIRI - News), the Official Satellite Radio Partner of the NFL, will provide the most comprehensive radio coverage available of the 2007 NFL Draft live on SIRIUS NFL Radio, channel 124, the only 24/7 year-round radio channel devoted to the NFL.

Source: SIRIUS Satellite Radio

On Saturday, April 28, SIRIUS NFL Radio will broadcast live from 11:00 am- 11:00 pm ET from NFL Draft headquarters at Radio City Music Hall in New York City. On Sunday, April 29, SIRIUS' on-site coverage continues from 11:00 am ET through the final selection. In all, with SIRIUS covering every pick of both days, 20 hours of live NFL Draft coverage will be presented.
SIRIUS will feature the live announcements of all 32 teams' selections; analysis by SIRIUS' lineup of NFL experts including Randy Cross, Gil Brandt, Pat Kirwan, Tim Ryan, Jim Miller, Adam Schein and Bryan McGovern; interviews with top draft picks and players around the country; and team reactions from coaches and general managers.

Subscribers can also listen to all of SIRIUS' live NFL Draft coverage online by tuning in channel 124 of SIRIUS Internet Radio (http://www.sirius.com/sir), the CD-quality, Internet-only version of the SIRIUS radio service.

On Thursday, April 26, SIRIUS NFL Radio's midday show, Movin' The Chains, hosted by Tim Ryan and Pat Kirwan, will air live (11 am-3 pm ET) from the Draft media luncheon at Chelsea Piers in New York City. Ryan, a third-round draft pick of the Chicago Bears in 1990, and Kirwan, a former front-office executive of the New York Jets, will be on-site conducting interviews with some of the top prospects in this year's draft while providing SIRIUS listeners with all the latest pre-Draft news.

As the Official Satellite Radio Partner of the NFL, SIRIUS broadcasts live nationwide every pre-, regular, and post-season game of the NFL season, plus the Super Bowl and Pro Bowl. Listeners can hear home and visiting team broadcasts, national radio broadcasts and Spanish-language broadcasts for select games. SIRIUS NFL Radio, channel 124, airs year-round providing NFL fans with the only 24/7 radio channel dedicated entirely to professional football, with live games, news and analysis daily, coverage of the NFL Draft and other NFL events, a fantasy football show and more.

SIRIUS is also the Official Satellite Radio Partner and of the NASCAR, the NBA and the NHL, and carries live NCAA football and basketball from over 150 of the nation's colleges and universities. SIRIUS also carries live English Premier League Soccer, UEFA Champions League Soccer, Arena Football League, Canadian Football League, and National Lacrosse League games, plus live coverage of Wimbledon and a variety of other sports coverage. For more information visit http://www.sirius.com.

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4/23/2007 10:28:00 AM


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BOA's Jacoby Weighs In

April 23, 2007

Jonathan Jacoby published a 1Q Preview note lowering price targets, highlights below:

Satellite Radio 1Q07 Preview

Key Inputs Point to Lower Fair Value for Both XMSR and SIRI

􀁘 Despite the recent sharp decline in share prices, we maintain our neutral ratings on XMSR and SIRI – standalone values and merger synergy values likely are lower than previously estimated. Given the proposed merger, the fair value of XMSR and SIRI consists of fair value as a standalone entity plus the expected value of merger synergies. In our view, BOTH components are worth less than we had previously estimated.

1) Lowering our stand-alone estimates due to lower longer-term conversion rate assumptions. New standalone value estimates are $2.25 (from $2.50) for SIRI and $10.50 (from $13.50) for XMSR. We have scrubbed our valuation models for both companies. The principal adjustment was to reduce our longer-term OEM conversion rate estimates for XM to make them more consistent with our longer- term assumptions for Sirius (i.e., 40-45%). Our previous model assumed that conversion rates bottomed at 50% in 2H07. The adjustment to OEM churn shaves ~500K subscribers off of our 2010 year-end estimate.

2) Lowering our merger synergy assumption to $3.6B from $5B – sports rights fees could increase initially under the base scenario. Our prior analysis assumed that combined programming and content expenses would be reduced by 15% in ’08 and by 25% in ’10 and thereafter. However, in order to be able to offer baseball or football to subscribers of both satellite networks, the merged entity might need to increase the current payments and/or extend the agreements. Our model now assumes that there are no net programming cost savings as lower costs for certain programming (e.g., music and talk channels) could be offset by higher sports rights fees.

􀁘 The current stock prices seem to suggest that the probability of regulatory approval of the merger is roughly 35-40% - but our FCC contacts believe that the percentage is trending lower. Assuming that our new fair value estimates for XMSR and SIRI with or without a merger are roughly correct, we estimate that the market implied probability of obtaining regulatory approval for the merger from the DOJ and FCC is between 25% and 40%.

􀁘 On a positive note, we see little downside risk to our 1Q07 (and 2007) subscriber estimates. In fact, we believe that XM should beat our net add estimate of 242K (consensus is 334K – we believed that 290K is reasonable). We expect Sirius to meet or beat our net add estimate of 461K (consensus is for net additions of 497K). XM and Sirius will report 1Q07 results on April 26th and May 1st, respectively.

􀁘 Our new price targets are $2.75 for SIRI and $12.50 for XMSR. Given a smaller synergy value estimate and lower standalone value estimate for each company, we estimate that SIRI would be worth ~$3.50 and that XMSR would be worth ~$15.50 if the merger is approved. Our new price targets are $2.75 for SIRI (from $3.50) and $12.50 for XMSR (from $17) – our new targets assume a 40% probability of the proposed merger receiving the necessary regulatory approvals.

􀁘 Sector View: Audience erosion will continue to cap top-line growth over the next decade, whether radio "goes Google" or not

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4/23/2007 10:04:00 AM


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