Second Analyst Cautions on Sirius (SIRI) Numbers

Stock Tickers: SIRI, XMSR

Yesterday Banc of America’s satellite analyst Jonathan Jacoby issued a cautionary statement on Sirius Satellite Radio (SIR) stating that there was a weakening of Sirius compared to 2005 holiday sales and that manufacturing issues would be important this year.  "Recent channel checks with our buying sources continue to indicate a much weaker sales environment than last year for satellite radio," Jacoby said in his firm’s research note where he maintained his Neutral rating. He also maintained his Buy rating on XM Satellite (XMSR).

If you will recall, just yesterday Cramer hogwashed this and said it was too soon to make that call even if it was true.  The problem with what Cramer told you yesterday is that this morning we were sent an alert that Pacific Crest has made some similar comments on Sirius (SIRI).  Pacific Crest also has said that the initial trends are looking better for XM Satellite (XMSR), which also mirrors the Banc of America comments. 

This is a boutique research call so it may not get much coverage today, but it is at least starting to ring of something that could be of substance commenting on the potential of a new subscriber add miss for the dominant holiday quarter.

It should be noted that Stifel Nicolaus put odds at 75% yesterday for a merger between XM & Sirius within 18 months.  If we get anything more solid out of the report or on other issues we’ll follow-up on it.  The stock is down 1/2% on this pre-market, but investors should recall that this is only a $0.02 move to the downside as investors aren’t rifling the shares of SIRI on "cautionary comments" if there is no outright downgrade. 

With such a large universe of analysts covering the name you will probably get quite a bit research either confirming this theory or just refuting it in the coming days.

Jon C. Ogg
November 28, 2006