Investing to Wealth

Sirius XM Radio Inc. (NASDAQ: SIRI)(D*)

* Financial status indicator is deficient: Issuer failed to meet NASDAQ continued listing requirements.

Sirius XM Radio Inc. (SIRI) has two principal wholly owned subsidiaries, XM Satellite Radio Holdings Inc. and Satellite CD Radio Inc. The Company is engaged in broadcasting in the United States, its music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through its satellite radio systems, the SIRIUS system and the XM system. On July 28, 2008, its wholly owned subsidiary, Vernon Merger Corporation, merged with and into XM Satellite Radio Holdings Inc.; as a result, XM Satellite Radio Holdings Inc. became its wholly owned subsidiary.

The SIRIUS system consists of three in-orbit satellites, approximately 120 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios. The XM system consists of four in-orbit satellites, more than 700 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios. As of December 31, 2008, Sirius XM Radio had 19,003,856 subscribers. In addition, it provides music services for commercial establishments; music and comedy channels to mobile phone users; and music channels and select non-music channels over the Internet; a suite of data services; services that offers graphic information; and various real-time weather services, as well as operates a television service, which provides content designed primarily for children in the backseat of vehicles.

Sirius XM Radio Inc. was formerly known as Sirius Satellite Radio Inc. and changed its name to Sirius XM Radio Inc. in August 2008. Sirius XM Radio Inc. was founded in 1990 and is headquartered in New York, New York

Source: https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=SIRI , http://www.sirius.com/ , http://www.reuters.com/finance/stocks/incomeStatement?stmtType=INC&perType=ANN&symbol=SIRI.O

Financial Summary

At June 30, 2009, SIRI had 18,413,435 subscribers, a decrease of 163,395 subscribers, or 1%, from the 18,576,830 subscribers as of June 30, 2008. The decrease was principally the result of 755,659 fewer gross paid promotional trial additions due to the decline in North American auto sales. This decline was partially offset by an increase of 592,264 in self pay subscribers compared to June 30, 2008. Gross subscriber additions decreased approximately 35% during the three and six months ended June 30, 2009, compared to the three and six months ended June 30, 2008. OEM gross subscriber additions decreased due to the 35% decline in North American automobile sales and retail gross subscriber additions decreased due to declines in consumer spending. Deactivation rates for self-pay subscriptions in the quarter increased to 2.0% per month compared to 2008 reflecting reductions in consumer discretionary spending, subscriber response to increases in price for multi-subscription accounts, the institution of a monthly charge for streaming service and channel line-up changes in 2008.

Revenue grew 1%, or $6,784, in the three months ended June 30, 2009,compared to the same period in 2008. This revenue growth was driven by a 1% growth in weighted average subscribers, the sale of “Best of” programming and rate increases on SIRI’s multi-subscription and Internet packages resulting in the growth of Subscriber revenue by 3%, or $18,668, in the three months ended June 30, 2009, compared to the same period in 2008. Advertising revenue decreased 33%, or $6,200, in the three months ended June 30, 2009, compared to the same period in 2008. The decrease in advertising revenue was driven by the decline in the national radio advertising market and the current economic environment. Equipment revenue decreased 29%, or $4,519, in the three months ended June 30, 2009, compared to the same period in 2008. The decrease in equipment revenue was driven by declines in sales through the Company’s direct to consumer distribution channel.

Other revenue decreased 14%, or $1,165, in the three months ended June 30, 2009, compared to the same period in 2008. The overall increase in revenue, combined with a decrease of 28%, or $186,553, in adjusted operating costs (total operating expense excluding restructuring, impairments and related costs, depreciation and amortization and share-based payment expense), resulted in improved adjusted income (loss) from operations of $132,219 in the three months ended June 30, 2009, compared to ($61,118) in the same three month period in 2008.

Subscriber acquisition costs decreased 46%, or $69,597, and decreased as a percentage of revenue to 13% from 25% in the three months ended June 30, 2009, compared to the same period in 2008. This improvement was driven by fewer OEM installations relative to gross subscriber additions, decreased production of certain radios, lower OEM subsidies and lower aftermarket inventory reserves as compared to the three months ended June 30, 2008. Subscriber acquisition costs also decreased as a result of the 35% decline in gross additions during the three months ended June 30, 2009, compared to the three months ended June 30, 2008.

General and administrative costs decreased 33%, or $22,226, mainly due to the absence of certain legal and regulatory charges incurred in 2008 and lower personnel costs. Engineering, design and development costs decreased 35%, or $5,571, in the three months ended June 30, 2009 compared to the same period in 2008, due to lower costs associated with manufacturing of radios, OEM tooling and manufacturing, and personnel.

Restructuring, impairments and related costs increased $27,000 mainly due to a loss of $24,196 on capitalized installment payments, which are expected to provide no future benefit due to the counterparty’s bankruptcy filing, for the launch of a satellite.

Source: http://investor.sirius.com/sec.cfm?CompanyCIK=908937&DocType=&Year=

Analyst Consensus

This is the consensus forecast amongst 4 polled investment analysts. Against the Sirius XM Radio Inc. company.

The one analyst offering a 12 month price target expects SIRI share price to rise to 0.80 in the next year from the last price of 0.6111.

Source: Financial Times.com

Source: http://www.reuters.com/finance/stocks/estimates?symbol=SIRI.O

Investment Highlights

SIRI in September announced that SIRIUS FM-5, the newest addition to the SIRIUS XM satellite fleet, was recently placed into service on the SIRIUS network. The new satellite, which was manufactured by Space Systems/Loral, provides improved signal penetration and reception to millions of SIRIUS subscribers nationwide. FM-5 is now fully operational and broadcasting SIRIUS XM programming and data services to SIRIUS radios in North America.

The satellite launched June 30, was guided to its final orbit position, and has successfully completed all post-launch testing. SIRIUS FM-5 is one of the world’s most powerful communications satellites and is the first geostationary SIRIUS satellite, complementing the SIRIUS fleet of three non-geostationary satellites. SIRIUS FM-5’s addition to the current SIRIUS fleet significantly increases the broadcast power of the total SIRIUS network. SIRIUS FM-5 is designed to provide more focused power in areas of peak population, such as metropolitan areas on the east and west coast, as well as significantly improving reception when driving under heavy foliage. Its location in a geostationary orbit position over North America (approximately above Texas, at 96 degrees west longitude) assures that home receivers can aim at a fixed point in the southern sky to receive a signal on a constant basis.

SIRI earlier this year announced that it intends to offer $250 million aggregate principal amount of Senior Secured Notes due 2015 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States in compliance with Regulation S under the Securities Act. SIRIUS XM will use the net proceeds from any such offering to repay certain indebtedness incurred under its Credit Agreement with Liberty Media Corporation. The securities will not be registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration, except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.

SIRI announced in September that it received notice from the Nasdaq Stock Market on September 15, 2009 that its common stock had closed below $1.00 per share for 30 consecutive business days and is therefore not in compliance with the Nasdaq Marketplace Rule 5450(a)(1). In accordance with Marketplace Rule 5810(c)(3)(A), SIRIUS XM may regain compliance if at any time by March 15, 2010 its common stock closes at or above $1.00 for 10 consecutive business days. The Company intends to maintain the listing of its common stock on Nasdaq and will consider available options if its common stock does not trade at a level likely to result in compliance with Nasdaq’s minimum bid price requirement by March 15, 2010. This notification was expected given the reinstitution of Nasdaq Marketplace Rule 5450(a)(1) on August 3, 2009 and has no effect on the listing of SIRIUS XM’s common stock at this time. In May 2009, the Company’s stockholders approved an amendment to its certificate of incorporation to effect a reverse stock split at a ratio of not less than one-for-ten and not more than one-for-fifty. The Company’s board of directors has authority to select an exchange ratio within the approved range at any time prior to June 30, 2010. The board of directors intends to effect the reverse stock split only if it determines the reverse split to be in the best interests of stockholders. Such a reverse split would put the company in compliance with the Nasdaq bid price requirement.

Source: Scottrade.com, Reuters.com, Sirius.com

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

No current signals

Bollinger Bands

SIRI has been relatively stable recently. This is evidenced by the width of its Bollinger Bands which are tighter than normal. Additionally, SIRI is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

MACD

The MACD for SIRI currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

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