When Sirius Radio (NASDAQ: SIRI) bought and closed in on rival XM Radio last month, the first thing Sirius CEO Mel Karmazin did was to look at cost cutting via taking out redundancies from the merged company. Although all kinds of ideas are floating in the air to increase Sirius subscriptions and push its stock price back above the $1 mark, some are questioning how the combined satellite radio company can grow in 2009.

Indeed, Sirius estimated its subscriber base this morning to be at 19.5 million paying subscribers by the end of this year, with growth hitting 21.5 million subscribers by the end of 2009. So, that leaves Sirius with a goal of growing its base two million subscribers next year. Analysts noted that those numbers are a slowdown from 2007's addition of 3.7 million subscribers and 2006's addition of 4.4 million subscribers. Of course, there were two companies offering service those two years -- now there is one.

Unless Sirius can be really aggressive in marketing its aftermarket radios in new vehicles (the subcompact, four-cylinder kind consumers are actually buying) and ensure Sirius radios are offered as standard equipment in the vehicle product mix outside the defunct truck and SUV markets, it will have a tough time hitting 2009 prospects for growth. There are simply too many other alternatives for consumers listening in their cars (iPods and podcasts/downloaded music, anyone?). Karmazin's constant explanation during the XM merger process was that consumers have so much choice about what to listen to and where, that a combined Sirius/XM would not be a monopoly threat. He's right, and it's starting to show as subscriber numbers slow down.

U.S. stock futures were lower early Monday as investors concerns over the banking sector grew. Federal regulator seized two more banks, 1st National Bank of Nevada and First Heritage Bank, which were scheduled to reopen on Monday as Mutual of Omaha Bank branches. The Senate also passed a major housing bill over the weekend, and this could actually give a boost to mortgage lenders like Fannie (NYSE: FNM). Meanwhile, oil prices rebounded as European markets declined. As of 8:00 a.m., it seems Wall Street would start weak.

Reporting earnings today are Kraft Foods (NYSE: KFT) - Kraft reported 58 cents earnings per share excluding items, beating estimates of 50 cents; Verizon Communications (NYSE: VZ) - Verizon reported earnings of 67 cents per share, excluding items, beating estimates by 2 cents; and after the close of trading, Amgen (NASDAQ: AMGN).

Amgen (NASDAQ: AMGN) stock is jumping over 17% in premarket trading after announcing late Friday its experimental osteoporosis drug, denosumab, significantly reduced the risk of bone fracture in post-menopausal women in a large trial. Rodman & Renshaw and Jefferies & Co both upgraded Amgen to Market Outperform and to Buy respectively.

Unilever NV (NYSE: UL) will sell its North American laundry detergents business to private equity investor Vestar Capital Partners for $1.45 billion (euro924 million). Unilever said the sale consistent with its strategy of divesting non-core businesses and concentrating on a few core ones.

The merger saga of XM Satellite Radio (NASDAQ: XMSR) and Sirius Satellite Radio (NASDAQ: SIRI) has gone on for so long that yesterday's FCC approval was almost a letdown. The companies have lost hundreds of millions of dollars over the year-and-and half since the marriage was first proposed.

The green light comes with some draconian conditions. According to The Wall Street Journal (subscription required), "As part of the deal, the companies have agreed to a three-year price cap as well as promising to bring interoperable radios to the market within a year." The price cap arrangement could hardly be worse for the new operation. Each company still bleeds red ink and has over $1 billion in debt.

The ability to raise prices to consumers could be the key to the survival of satellite radio. The industry's major source of subscribers is new car sales. Those may not recover for two years. The combined company will have close to $2.5 billion in debt, and may have to raise more money. In the current environment, that will be hard. Depending on how the capital comes in, current common shareholders could be diluted.

The news of the approval should be accompanied with some joy, but, it won't be. That may be why the shares in both companies trade so low.

Douglas A. McIntyre is an editor at 247wallst.com.

Sirius Satellite Radio Inc.'s (NASDAQ: SIRI) $3.5 billion acquisition of rival XM Satellite Holdings Inc. (NASDAQ: XMSR) might at long last be approved by the Federal Communications Commission, according to the Wall Street Journal.

"Republican commissioner Deborah Taylor Tate is the only FCC member left to vote on the deal and she is expected to do so shortly, two FCC officials close to the negotiations said," the paper said. "She is expected to sign off on the deal in exchange for a consent decree that resolves several enforcement issues involving the satellite radio companies and a combined fine of about $20 million, an FCC source close to the deal."

Even with the regulatory hurdles just about cleared, the future of satellite radio is far from clear. As my colleague Douglas McIntyre noted earlier today, losses at both companies are narrowing but their subscription growth rates are slowing. Both firms also are more than $1 billion in debt.

Though I am a big fan of the medium, I wonder sometimes whether its moment in the sun has past. Remember BetaMax and 8-track players were considered cutting edge at one time.

Three of the commissioners of the FCC have voted on the Sirius (NASDAQ: SIRI) merger with XM Satellite (NASDAQ: XMSR). Two have voted in favor, and one has voted against. That leaves two other votes. In other words, the deal could still be killed.

One of the remaining commissioners has indicated that he would vote for the merger if the companies would agree to a six-year price cap on their services. According to The Wall Street Journal, "The offer was viewed as an attempt to start negotiations, but the companies so far are showing little interest in haggling."

Is it any wonder? The most recent earnings reports from the two companies indicate that, while their losses are getting smaller, their subscription growth rates are slowing. Each firm has more than $1 billion in debt and neither has ever had an operating profit. In other words, if the companies cannot raise their rates the chances of them becoming profitable are significantly curtailed.

The FCC may be putting Sirius and XM in an almost impossible position. If they are willing to make moves which could hurt their earnings longterm, they may get the votes they need for approval. If not, the merger could be scuttled.

The future of satellite radio is now based on two bad outcomes.

Douglas A. McIntyre is an editor at 247wallst.com

Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.

Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading.

American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.

Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.

This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.

XM Satellite Radio (NASDAQ: XMSR) shares are trading higher today after the company announced it gained 322,000 new net subscribers during the second quarter, 17% higher than the same quarter last year. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on XMSR.

After hitting a one-year high of $16.44 in November, the stock hit a one-year low of $6.78 earlier this month. XMSR opened this morning at $8.75. So far today the stock has hit a low of $8.69 and a high of $9.02. As of 12:15, XMSR is trading at $9.04, up 48 cents (5.8%). The chart for XMSR looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $6 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just two months as long as XMSR is above $6 at September expiration. XM would have to fall by more than 33% before we would start to lose money.

XMSR hasn't been below $6.75 at all in the past year and has shown support around $7.25 recently. This trade could be risky if the company's earnings (due out late this month) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low at $6.80, which is has bounced up from recently.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XMSR.

XM Satellite Radio (NASDAQ: XMSR) closed at $8.44 Thursday.

XMSR and Sirius (NASDAQ: SIRI) announced a merger of equals in February of 2007. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.

Jonathan Adelstein, an FCC commissioner, said he'd vote to approve a merger between XMSR and SIRI if they cap prices and increase public interest and minority programming. The FCC Chairman Kevin Martin recommended approval of the SIRI-XMSR merger this spring. Adelstein would be the third of five commissioners to support the deal; a majority is needed.

XMSR August option implied volatility of 133 is above its 26-week average of 84 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Before the bell: Citi earnings push futures higher despite MER, GOOG, MSFT disappointments

Advanced Micro Devices (NYSE: AMD) stock is down 6.6% in premarket trading after the company posted its seventh consecutive quarterly loss of $1.19 billion, or $1.96 per share, missing Wall Street estimates. The operating loss would have been 60 cents a share, heftier than the loss of 52 cents a share from analysts polled by Reuters Estimates. Following the report, AMD also announced that CEO Hector Ruiz would be replaced by COO Dirk Meyer. Ruiz will stay on as executive chairman.

The Wall Street Journal reports that Freddie Mac (NYSE: FRE) is considering raising capital by selling as much as $10 billion in new shares to investors. FRE stock is down again this morning after the recent wild swings in share price. This morning FRE shares are trading over 5.7% lower in premarket action.

Mattel Inc. (NYSE: MAT) shares rose nearly 4% in after-hours trading following second-quarter financial results. The toy maker's profit fell by nearly half, but results still beat Wall Street expectations. Global Barbie sales dropped off 6%.

Sirius Satellite Radio, Inc. (NASDAQ: SIRI) laid out what it thought its financials would look like next year after a merger with XM Satellite Radio Holdings (NASDAQ: XMSR). The market wasn't impressed.

Sirius had an odd way of expressing how it would save money next year. According to the company, "Total synergies, net of the costs to achieve such synergies, for the combined company are expected to be approximately $400 million in 2009." The firm also said it expected positive free cash flow.

All of that good news sent Sirius down almost 9% to $1.91. Volume was heavy at over 35 million shares, so the selling turned into a stampede.

Sirius forgot to mention the one number that Wall St. really wants to see which is what it thinks the revenue for the merger company will hit for 2009. Without that, it is impossible to determine whether any of the cash flow numbers are believable.

Oil was again the headline event today with the price per barrel near $142.00 and talk of $150.00 sooner rather than later. But all in all this day was far "less bad" than it could have been, especially if you consider the selloff yesterday, and consider that this was a Friday ahead of a shortened work week where traders are leery of holding positions. To top it off, the June quarter ends on this coming Monday.

The University of Michigan posted consumer confidence today at a 28-year low as inflationary pressures and fears remain high. The final June reading fell down to 56.4 from 59.8 in May and down from the prior June preliminary release of 56.7.

Here are the unofficial closing bell levels for today:
DJIA 11,365.20 -.85%
S&P 500 Index 1,279.05 -.33%
NASDAQ 2,315.63 -.25%
52-WEEK LOWS
Early-Bird Technology Upgrades & Downgrades

Merrill Lynch & Co. (NYSE: MER) dropped further after Lehman said it was worried Merrill could write down another $5.4 billion in he Q2 report alone. Shares were down in the the final minutes of trading.

XM Satellite (NASDAQ: XMSR) closed at $7.38.

XMSR and Sirius Satellite (NASDAQ: SIRI) announced a merger of equals in February of 2007. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.

The FCC Chairman Kevin Martin recommended approval of the SIRI-XMSR merger. The FCC Commissioners could rule on the proposed merger soon.

XMSR July option implied volatility of 114 is above its 26-week average of 79 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Stocks were up today, but less than you might imagine after a large drop of more than $4.00 on oil in late-day prices. So much for Goldman Sachs' raising oil target again today, as well as lifting the oil services sector and upping price targets for some of the sector's stocks .

Here are today's unofficial closing bell index levels:

• DJIA 12062.93 (+33.87)
• S&P500 1342.86 (+5.05)
• NASDAQ 2462.07 (+32.36)
• 10YR T-NOTE 4.199% (+0.045%)
• 52-Week Lows
• Top 10 Analyst Calls

Evergreen Solar Inc. (NASDAQ: ESLR) was one of the huge winners today with shares up over 20% at $12.33 in today's final minutes. The company announced a huge second round contract that added significantly to its backlog.

Huntsman Corporation (NYSE: HUN) imploded after its private equity buyout was officially notified as "being killed" by the buyers, and shares were down 38% at $12.79 at the end of the day. Mark that as an all-time low.

XM Satellite Radio (NASDAQ: XMSR) - The FCC Chairman Kevin Martin recommended approval of the Sirius Satellite (NASDAQ: SIRI)-XMSR merger. The FCC Commissioners could rule on the proposed merger soon.

XMSR and SIRI announced a merger of equals in February of 2007. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.

XMSR July option implied volatility of 76 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MAJOR PAPERS:

• The Wall Street Journal reported that after years of rapid grows, many hedge funds are shutting their doors or merging with others, as expansion has dramatically slowed. As a result, the industry is being dominated mostly by big firms, such as Och-Ziff Capital Management Group LLC (NYSE: OZM), D.E. Shaw & Co., and Paulson and Co.
• Shares of Ctrip.com International Ltd (NASDAQ: CTRP), China's major Internet travel booker with about 58% of the country's online travel business, have dropped about 30% in the last six weeks alone creating a possible buying opportunity, according to the Wall Street Journal's "Heard in Asia". Travel in China is expected to grow solidly in the long-term and Ctrip.com said it expects revenue to grow 30% for the three months ending June 30 from a year earlier.
• In a move that could potentially usher in a new phase in the credit crunch, the Financial Times reported that The Goldman Sachs Group Inc (NYSE: GS) is said to be close to finalizing a plan to restructure a $7B investment vehicle formerly run by Cheyne Capital, a London-based hedge fund.

OTHER PAPERS:

• The Washington Post reported the proposed merger between XM Satellite Radio Holdings Inc (NASDAQ: XMSR) and Sirius Satellite Radio Inc (NASDAQ: SIRI) was under fire yesterday by senior members of the Congressional Black Caucus, who said the deal does not provide enough opportunities for minority-owned programming.