1. Consumers at this point are extremely price sensitive. Sirius XM could lose price-sensitive subscribers and those who are looking to cut discretionary costs.

2. Sirius XM is at the mercy of key talent such as Howard Stern who could choose to leave when his contract expires in 2010. If Sirius XM fails to meet his compensation expectations he could take a good chunk of subscribers with him.

3. Sirius heavily depends on key automotive partners to distribute its service and will need to continue providing incentives for them to offer it. Given the concerns of the automotive industry installation of this service is not a top priority for them.

4. Sirius XM Radio has no economic moat whatsoever. Worse its competitive substitute, a standard car radio, is completely free. As well, alternatives such as Internet radio continue to provide pressure on the firm. For example Ford is working with Pandora, an Internet radio service company, to stream its content into the car through its phone applications.

5. Competition is likely to only keep stacking higher as the technology inside of cars becomes more advanced. With the wide use of smart phones the demand for satellite radio may become smaller and smaller due to an increased demand for more popular substitutes.

Summary:

We have no official buy or sell position on Sirius XM (SIRI) but heavily encourage a positive discussion to see all points of view be they bullish, bearish, and or something else.

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