Analyst reduces financial forecasts for Sirius

PHILADELPHIA - Shares of Sirius XM Radio Inc. fell on Tuesday after an analyst reduced his subscriber and cash flow forecasts for the satellite radio provider and maintained a "Sell" recommendation on the stock.

Goldman Sachs analyst Mark Wienkes also cut his six-month price target in half to 25 cents. Sirius fell 2 cents, or 5.3 percent, to 36 cents. The stock has traded between 22 cents and $3.94 over the past year, and has lost 88 percent of its value since January.

Wienkes believes the company will reduce or miss its subscriber projections as demand erodes.

He also noted that Sirius' revenue isn't enough to cover operating and capital expenses, leading to negative free cash flow while the company continues to be dependent upon outside financing in a tight credit market.

The analyst said shareholders are facing dilution of their holdings due to higher interest charges or issuance of new shares. Sirius recently gave debt holders 67 million shares to retire $30 million of $300 million in convertible debt — and it could do it again.

Sirius faces $1.1 billion in debt coming due next year. The company is seeking to save $425 million in 2009 from its July merger with XM and trim its debt burden to reach profitability.

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