After the bloodbath: Analyst disagrees with Goldman Sachs

Anytime Ryan,

GS just has it all wrong.
Cowen has a much better understanding of this situation.
Good luck to all.

Cowen & Co. comments on Sirius Satellite Radio (Nasdaq: SIRI) and XM Satellite Radio (Nasdaq: XMSR) after the stocks sold off 12% and 17% yesterday, respectively, following a negative research note from Goldman Sachs.

The firm said they disagree with the Goldman note and expect FCC approval of the merger and the debt restructuring to drive a rebound of both stocks in the near term.

Some points Cowen made:

- The increased penetration of Chrysler and GM should generated higher Q/Q and Y/Y OEM adds, more than offsetting any slowing in vehicle sales.
- Sees merger synergies at $5B.
- Sees FCC approval of the merger in July
- Debt to Be Renegotiated by Closing
- Expects Arb Spread to Re-Narrow

I have heard that Goldman Sachs' will be involved in restructuring of debt for the combined company. What will they get for that? How about shares, lots and lots of cheap shares!

I have heard that Goldman Sachs' will be involved in restructuring of debt for the combined company. What will they get for that? How about shares, lots and lots of cheap shares!

I have NEVER seen a stock so maligned and manipulated in my ENTIRE LIFE.

There HAS to be an upside. A tipping point...when the shorts will finally lose leverage, and the tide will turn.

But we are in LIMBO until the merger becomes "OFFICIAL".

Even after that, Sirius has been so battered, so BEATEN down by the criminal FCC delay(almost 2 years!!!!), the shorts and the likes of Goldman Sachs...that it will take awhile for the dust to settle.

I have never been so exhausted and exasperated with a stock before. It boggles the mind how this stock has NEVER gotten a break for the last 3 years...no matter the good news, explosive growth....and promise of billions saved in synergies. At every positive turn, this stock was manipulated like a violin virtuoso.

Us longs have waited for the merger...for the time when Mel can finally come out in public and start blasting away at those who've held us down for so long....but we've been repeatedly denied that satisfaction with these continuous delays.

Just when we get good news(Martin approves merger) and are on the verge of the merge....GS comes out with this BOGUS downgrade. The same reason for downgrade as a few months ago....only with an even LOWER price target!

The thing that kills me is the RETARDED excuse GS used. That YOUNG people are using the ipod and iphones instead???? That stupid argument was out there over a year ago....and they drag it out again???.....and it WORKS????

GImme a break. The ipod and iphone are NOT a radio replacement for the car.

I cannot wait for this thing to FINALLY BE FUCKING DONE....this stock has been beaten down too FUCKING MUCH!

THere can only be upside after this. I can't wait for Mel to come out and aggressively counter attack these shorts.

Good post liam...I think most all longs feel that way. Such manipulation! Bastards.

>>>>>>> Us longs have waited for the merger...for the time when Mel can finally come out in public and start blasting away at those who've held us down for so long....but we've been repeatedly denied that satisfaction with these continuous delays.

This is a very naive point of view.

Those who were betting on the merger lost because it was a bad bet from the outset. Not only does the merger NOT make for a healthier industry, it is, and should be, enormously difficult to get done -- because it is creating a de facto monopoly in the satellite radio industry. Anyone who believed it was going to be easily done is delusional.

It is a shame to see it end this way. But if the merger is approved next week or next month, the companies still face an uphill climb, due in significant part to the loss of any opportunity at regaining any momentum. It couldn't have come at a worse time.

The companies were already suffering, and for the last 15 months have totally been distracted. XM has lost key talent, and those who remain are totally disinterested because management took away their passion. I don't know about Sirius, but I suspect the same applies there. You just cannot do that and expect the quality of the product not to suffer.

They're both dead meat at this point. If the merger breaks up and XM finds its way to the sub-$5 range, I may even buy a little more of it (but not until they dump the current management). Seems to me Sirius has little chance of long-term survival, no matter what.

The FCC should give XM and Sirius that chance.

I just want to know why Mel has not spoken to the investors about what is going on. With the stock constantly going down, the investors are very,very frustrated to say the least. cmon mel--we need some positive encouragement from you.Many of us have been supporting your company even through these hard times. You owe us some information.

I just want to know why Mel has not spoken to the investors about what is going on. With the stock constantly going down, the investors are very,very frustrated to say the least. cmon mel--we need some positive encouragement from you.Many of us have been supporting your company even through these hard times. You owe us some information.

Just curious -

Why is every analyst report that is not favorable to either company wrong and writen by a [INSERT RACIAL SLUR]? Then the hordes find it necessary to post the office phone number of the analyst on a chatroom in order to inumdate her/him with callsto voice displeasure over the report?

Is it even remoely possible that the analyst might be right? Is it possible that the market cap of these companies was too high, given their respective balance sheets? Isn't it possible that the analyst feels that she/he isn't doing her/his job by not reporting honestley held beliefs?

If any of you are parents, and I suspect some are, wouldn't you like to have an honest parnt-teacher conference with your children's teachers? I mean, don't you want your children's teacher to tell you that your children are in danger of failing when that is the case rather than tell you, "Johnny is a charm and everything is ok - don't worry - math really isn't that important - reading is overrated."

Let's get real with each other - neither company is doing well and it's not the fault of the FCC or NAB or anybody other than the management teams that gave us these results. The analysts just grade management. PPS is the report card.

Thanks liam...we were thinking the same thing. You just got it out first. Like that huge shit you been holding the whole car ride, and when you finally let it out you feel reborn.

Absolutely correct. One has to remeber that these stocks are owned by a lot of people that have lost a lot of money, so they lash out at anyone that doesnt support their position. Many bought in when the merger was announced thinking it was the path to quick riches, and it simply hasnt happened.

The managments of these two companies has been poor, but I generally feel that SIRI started the ball rolling with their overpriced payments to Stern, NFL, and the other franchises. When they paid Stern that obscene amount of dough out of despiration to stay alive, it was hard for XM to get something cheap. So the content war began and both are now paying the price.

i personlly dont support the merger and hope its denied, but even if it is, Mel has stated he will sue, so it will continue and both companies will languish. So I stay out of them for now. When the water clears we will see.

Mel has not spoken probably because they are in a quiet period based on the final negotiations with the FCC. IMHO

Stack is correct in his post.

analyst Tom Watts of Cowen & Co. is full of ignorance just like a satradio fanboy. For all we know Tom Watts could just be another one of Melvin Alan "Mel" Karmazin's bitches. It's easy for the educated consumer to see Mel's "merge" scheme is making a monopoly, not good for consumers, not good for the future of the satradio industry. Goldman Sachs has it correct.

For all those with investment money burning a hole in their pockets here is a tip, the future of radio is:
HD Digital Radio • IT'S TIME TO UPGRADE!
HD Digital Radio. It's here. It's local. It's free. DISCOVER IT!
www.hdradio.com/

DO THIS TODAY! Contact the FCC today and tell them why you want this merger approved NOW. FCC (home page) www.fcc.gov then scroll down left column and click on, Filing Public Comments with EFCS Express. On this page select Comment on Proposed Merger Between XM and Sirius - Docket 07-57.
Better yet CALL THE SWING VOTE Commissioners, Deborah Tate 202 418-2500 and Jonathan Adelstein 202 418-2300, this will get your opinion to them today.

Stack,

How can you argue on the one hand that the merger is a bad bet (and those who made it already lost) and then say the merger creates a de facto monopoly in the same breath? Its either a monopoly, which should mean the companies are going to be rolling in it- or its not a monopoly because of the increased competition from the new audio entertainment devices, mainly- ipods, HD radio and the internet.

Which is it Stack- you can't have it both ways...

Funny, when there's any good news it's because of the genius Mel but bad news is bullshit and the fault of the FCC, DOJ, NAB, God and anyone else that you can point a finger at. Fact is 6 - 7 years ago when these companies first started service there was a buzz. People were excited about uncensored talk & commercial free music. Since then both companies have censored their talk shows and millions upon millions of iPods have been sold. Remember, only 5 years ago very few people had iPods. Both companies failed to capitalize on their time in the spotlight, spent their way to bankruptcy and attempted a merger they knew would drag out indefinitely. SDARS is still a much better product that an iPod but both companies have failed miserably marketing their product and letting the consumer realize how great it is. Unfortunately their time to get this done has passed, no one gives a shit about SDARS anymore and no matter what I don't see SDARS ever being more than a niche product - if it can survive at all. What a shame.

Don't get mad at GS.... get mad @ the FCC.

The Draft has been Circulated!!

http://www.fcc.gov/fcc-bin/circ_items.cgi

Damn you have convinced me. I am going to switch over to HD radio because I miss shitty programming but now I can hear it in really good stereo. Don't worry about the cost, I have an extra $300 laying around somewhere. I think the first 10 minute block of commercials will probably make me blow my load. I'm so excited.

AC why do you feel the need to post the words HD Digital Radio. The "D" means digital moron.

So in essence you are writing Hybrid Digital Digital Radio.

LEN, CIRCULATED AND THE STOCK HAS STARTED IT'S CLIMB. FOR MY TOO BITS: MEL CAN'T COMMENT UNTIL THE MERGER IS APPROVED; MY FRIENDS HAVE BEEN WAITING ON THE MERGER TO BUY SATRAD; THE ONES WHO HAVE IT LOVE IT; WHEN IT IS FINALLY APPROVED I THINK YOU WILL SEE MEL MAKE SOME VERY POSITIVE ANNOUNCMENTS; HOPEFULLY THEY HAVE BEEN VERY ACTIVE IN POST-MERGER DEVELOPMENTS; I TAKE THE WARREN B APPROACH (LONGTERM).

I think everyone on here should post how much money they have invested in the stocks of these companies before commenting. Then we can all clearly see the direct correlation between merger fanboy-ism and dollars invested.

I'll start:
I have ZERO dollars invested in sat radio, and thus come from a vastly less biased position than many of the people on here who have so much invested (literally) in these companies.

I agree with the GS assessment. Sat radio is largely lame and has no future. The future is on-demand, customizable content (lastfm, pandora). This, combined with the ability to carry around a lifetime collection of music in your pocket, makes satrad look primitive. The nail in the coffin of satellite is its 1-way nature. The future is the internet everywhere, we are seeing the beginnings already. Additionally, people can't use increased competition from iPods/iPhones/streaming-audio, etc. as a reason to merge and then say that it's not a reason to lower guidance.

Google “Goldman Sachs, Clear Channel”. What an Eye opener.

SEC should investigate the relationship between the Goldman analyst Wienkes and the Hedge Funds shorting these stocks. Every other Wall Street Analyst sees this merger as positive and has raised their targets. Goldman is ruining this country with their Naked Shorts in the Stock Market and their Speculators driving up the cost of Oil, all supported by their in house analysts.
Goldman Sachs is minipulating XMSR so that they can benefit from it after the merger is finally approved. This is all BS coming out of Goldman. I’m betting as the stock is getting cheaper they are buying it without letting the market know they are out there picking up as many shares as possible. Goldman’s timing on releasing this report was planned. They see the merger is getting close and want to beat up the stock so they can buy it cheap

A few months ago Goldman has been against this merger. They most likely carried a large short position on XMSR. Now that it getting much closer to finally getting approved, Goldman wants to make sure thay can cover their asses because of all the problems that financials have gone through recently.
It is amazing that an analyst from GS and Citi can have such vastly different opinions. What ticks me off the most is Wienkes vagness and his timing for this “reiteration”. Something is going on here.
I encourage everyone here to take a look at some of the charts (if you haven’t already) and see what most people are banking on. I looked at the Fool the other day and they showed where the “pros” ranked this stock to outperform by like 3 to 1. This stock kind of reminds me of Corning a few years ago (I know totally different). BUT Corning hit a low of $1.34 after some bad reports and is now up to about $27. The long term is a win. But we all can’t wait to see what happens on the short after the FCC says “you may kiss the bride”. I’m betting it won’t be $2.12!
I agree with you Dawg, and it appears so does some big time investors… Siri has just been added to the intraday most active options list on the CBOE: 17454 SIRI JAN 5.0 C 09:41, that’s 17,454 calls for January, someone is betting BIG TIME, that the stock will reach $5 by Jan2009…Wonder who this could be!?

this HD Radio upgrade non sense needs to stop! how can the Terrestrial heathens promote such garbage to people and claim it's an alternative when: A. you do not recieve nearly as much content that sat radio provides (paying for and recieving a broadcast free can not be compared as far as content because of FCC regulations that terrestrial radio has and freedom sat radio has) B. 1 extra channel on all HD stations in your area is not enough for the upgrade especially when the radio's cost more then some sat radio subs
HD radio is a waste! i have both sirius and HD radio in my car and there is SIMPLY NO COMPARISON! HD radio is sooooo far behind in this battle with VERY-LIMITED PROGRAMMING, NO DJ's, and NO reason to run to circuit city to get sucked in by corporate NAB puppets like AC (NAB FANBOY)

DO THIS TODAY! Contact the FCC today and tell them why you want this merger DISapproved NOW. FCC (home page) www.fcc.gov then scroll down left column and click on, Filing Public Comments with EFCS Express. On this page select Comment on Proposed Merger Between XM and Sirius - Docket 07-57.
Better yet CALL THE SWING VOTE Commissioners, Deborah Tate 202 418-2500 and Jonathan Adelstein 202 418-2300, this will get your opinion of NO! to "merge" MONOPOLY. The "merge" is anti-consumer, and anti-satradio industry.

NO! to "merge"

pfreak, is correct. GS is correct and a bunch a satradio fanboys are not.

HD Radio is the most significant advancement in radio broadcasting since the introduction of FM stereo more than 50 years ago

HD Digital Radio • IT'S TIME TO UPGRADE!
HD Digital Radio. It's here. It's local. It's free. DISCOVER IT!
www.hdradio.com/

""Stack is correct in his post.""

LMAO!!!

so says anonymous coward...LMAO!!!

Tom Watts =

AT&T threatens Akamai and Cowen analysts are on crack
Earlier this week, the fine morons at Cowen and Co. downgraded Akamai on concerns of greater competition from AT&T intentions to increase their CDN business. Dan Rayburn points out several flaws with Tom Watts’ (Managing Director at Cowen) downgrade, however there are several other facts worth pointing out from this stunningly stupid analyst opinion.

First, have you looked at Akamai’s customer list yet? At last count stated in the Q3 earnings announcement, Akamai’s customer count was over 2,600 customers and still growing. Furthermore, this is an impressive list of customer names that shows that Akamai has tremendous penetration in the marketplace and across many different industries. Most enterprise companies would kill for a customer list like this, and Akamai didn’t get this customer base over night. It has taken Akamai almost 10 years to get this level of penetration and brand in the market. Akamai is fiercely competitive and the sales force is extremely focused on how to continue to penetrate the market with the new products and services that Akamai continues to create. Additionally, Akamai’s corporate culture is all about the customer and long term relationships with its customers. If you’ve ever bought anything from AT&T, I think you might recognize how different AT&T is in this respect. I am dumbfounded that Mr. Watts could conclude that AT&T is going to actually have the focus and influence to noticeably penetrate the CDN market in less than a year given Akamai’s dominance in the market. Sure, anything could happen, but Mr. Watts should have thought about how strong Akamai’s relationships are with its customers and how extensive the Akamai product portfolio is compared to what AT&T is going to offer for CDN services.

Second, Mr. Watts, who probably also thinks he invented the Internet, states "AT&T’s extensive network reach could shrink the average distance between a CDN node and a customer to as little as 100 miles versus Akamai's 250-plus miles." Wow, I wish he would have checked with someone before he went on the record saying this to save himself some disgrace. This one is simple to invalidate. AT&T is only one network out of 12,000 networks globally. Let me repeat, AT&T is only one network out of 12,000 networks globally. If AT&T is going to deploy servers in their network, their servers are still in only one network. Akamai, on the other hand, is in 1,100 networks and this includes deployments in AT&T’s network. So, how exactly does AT&T think they are going to get to 100 miles proximity of all of the 1,300,000,000 Internet users in the world given that they are only one network that makes up the Internet? AT&T doesn’t have any significant majority of the end user traffic either, so I’m not sure how AT&T and Mr. Watts thinks that they have any sort of end-user proximity advantage over Akamai.

For content delivery to truly work in terms of scale and best performance, a CDN vendor has to be in lots of networks. There is certainly jousting between Akamai and its competitors as to how many networks you need to be in to be a viable CDN. Many of Akamai’s lower tier competitors probably hit 30 to 50 networks and claim to be as good, but that’s still a lot more that just deploying servers within the AT&T network. There’s a good Akamai webcast on why highly distributed computing matters, and I suggest Mr. Watts watches it and learns a thing or two about this thing called the Internet.

Third, “Scene: AT&T and CDN -- Take 3 (at least)”. AT&T has made multiple attempts in entering the CDN space this decade. In fact, I remember them claiming to have a CDN offering as early as 2000. As Rayburn points out I don’t think they’ve had much success in their various attempts. Yes, this space might be a great market opportunity but based on prior execution of any CDN strategy that AT&T has had in the past, I don’t think they hold a strong track record for knowing how to enter or succeed in this market. This is not a space that is simple to do well in because of the technology needed and the domain knowledge of how to sell and support CDN services to high class enterprise customers. Just because AT&T has a few colos around the world, doesn’t automatically mean they will know how to integrate and support CDN services for big media or enterprise customers. This is where the degree of difficulty has stumped AT&T a couple of times in the past and how could they recruit experts to build this system for them? Honestly, why would any smart, talented developer who’s passionate about distributed systems and high performance server development want to work on AT&T CDN services versus working at a much cooler company like Akamai or Limelight?

Forth, this is technically really fucking hard stuff. The technology that powers Akamai is some pretty intense stuff. Akamai does over 650Gbps in traffic across all of it’s customers. If you are tech savvy, you’ll know that this is a massive amount of data and to handle this across thousands of datacenters and tens of thousands of servers, is not something AT&T is going to piece together any time soon. I would almost bet that there is not a single company in the world that in aggregate deals with as many Internet bits (not including porn or email) as Akamai does today. Akamai has been building out its technology platform for almost 10 years. It’s complex stuff that makes Akamai work. I realize that AT&T doesn’t need to build a system as vast or powerful as Akamai, and if their jockeying to just get a piece of the pie they could cobble up a low end offering that would work for some smaller tier customers. However, if this is what they are looking to pull off, then how does Mr. Watts think this will affect Akamai’s business? The smaller tier customers that AT&T would go after probably aren’t even customers that Akamai has today or wants in the future. Most of Akamai’s customers are customers that depend on the vastness of Akamai’s network and the many features and flexibility that the Akamai platform offers. AT&T does not have the expertise nor the feature set or the rich product portfolio to compete with Akamai in any of Akamai’s big name accounts.

Finally, if you’re with me still, I find it completely offensive that analysts like Mr. Watts have zero clue yet can publish an analyst opinion that can affect a company’s market cap by hundreds of millions of dollars. He should be investigated by the SEC or something because this just doesn’t seem right that one idiot can have so much financial influence on a company. Someone should put a professional smackdown on Mr. Watts.

Ryan,

Can you check these guys ip's or does moveable type tell you where these comments are coming from? I only ask because we see these same kind of comments come from the guys at HD Radio. We also see people leave comments bashing siri stock only to see that their IP shows they are from financial institutions.

Just a heads up... it might be nice to out some of these clowns and their tactics.

Clarification... I was referring to previous posts where the comments were praising HD radio to no end.

It's pretty hilarious that there are idiots still willing to trot out the old "this merger creates a monoply" canard.

That said, I am SO thankful for the senseless, needless beatdown SIRI and XM have taken. What a great buying opportunity!

For the record, I think HD radio sucks balls and give it zero support.

AC: "The future is on-demand, customizable content (lastfm, pandora)."

I agree 100% !!!!

....and this is coming from on of the BIGGEST Satellite Radio fans in history!

Chuck,

Sorry if the FACTS and TRUTH hurt. It's a tough idea to handle but it's more than clear satellite radio has a terminal problem, a problem a "merge" scheme is not going to solve, but make worse.

AC: THATS CLEARCHANNEL 101 A MERGER WILL NEVER WORK ON A FAILING PROPERTY LOOK AT CLEARCHANNEL!

If the Wienksky is correct at GS then obviouly CLEAR CHANNENL should also be a CONVICTION SELL because the younger people he claims are using other forms of listening devices and recording platforms and according to him will not be using T-radio...

CONVICTION SELL on Clear Channel if the Wienksky is correct and young people are not using Sat/T-radio because of more advanced listening devices and recording platforms...
Advertising folks take note, don't put money into a dying mediums according to the Wienkster report straight form GS...

So Wienkes = the truth
&
Watts is a hack.

Inside source says there will be no need for last 2 commissioners to vote. First 2 will give it a 3-0 and this will be done by friday, Sirius/XM close by end of day on Monday 30th.

Even if the inside source is correct, it is unlikely that the merger would close on the same day. M&As don't happen overnight. After aproval comes funding, legal and closing docs, etc. I'd give it at least as long as a typical mortgage before the two companies are actually merged.

Even if the inside source is correct, it is unlikely that the merger would close on the same day. M&As don't happen overnight. After aproval comes funding, legal and closing docs, etc. I'd give it at least as long as a typical mortgage closing before the two companies are actually merged.