Banks are not the only companies in trouble in the current market. Sirius XM (NASDAQ: SIRI) is viewed by some on Wall Street as a dead company. Shares in the firm trade for 95 cents and have been as low as 86 cents recently. Over time, being below $1 could cause a Nasdaq delisting notice.
The newly merged company has over $2 billion in debt. Neither firm ever made an operating profit and Wall St. is unclear about how much money management can take out in a consolidation.
According the The Wall Street Journal, "The company will soon introduce radios that allow consumers more flexibility in the programming, including a 50-channel plan that costs $6.99 a month." Sirius will also bring out a "best of" offering for $4 a month.
Most struggling companies would have trouble facing one challenge. Sirius faces three.
The first is that the current Wall Street environment may make it nearly impossible to re-finance debt or raise more money. The second is that selling programming at a discount may make revenue matters at the company worse. While it could bring in more subscribers, some current customers may "downgrade" to the lower service tier, cutting the company's income-per-subscriber and undermining revenue growth.
The last and most serious trouble may be that satellite radio is not the "hot product" any more. In a world awash with MP3 players and multimedia handsets which run on 3G networks, there may be no place for Sirius to go.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-15-2008 @ 11:58AM
Mike O said...
... no place to go... UNLESS they pair up with one or more mobile phone companies to offer programming via 3G network.
There were rumors quite awhile back about an iPod with satellite radio built in. Could now be the time? I see no technical reason why Apple and AT&T couldn't offer SiriusXM on the iPhone.
9-15-2008 @ 1:15PM
Barry said...
Mr. McIntyre has always been "NEGATIVE" on Sat. Radio. I remember his negative comments from way back. Something else is going on with this guy,as you can feel the one on one between him and SiriusXM radio. He knows full well that this company will make money and profit very soon.
9-21-2008 @ 8:37PM
Arthur Hahn said...
Satellite radio technology has virtually made every land based radio station obsolete. When you think of the billions of dollars invested in land based radio, it is no wonder that the powerful parties involved are doing everything they can to put the satellite radio business under. What they should be doing is recognizing that they can work together and that they will only weaken our country more by driving the technology overseas.
They can not and will not prevent tecnology from winning out. It has never happened and never will. Go satellite radio.
9-25-2008 @ 2:26PM
benito said...
This stock is a dog, worst decision I have made on an investment in years. Followed Cramer's opinion and got creamed. Really thought the merger with XM would push this to new heights. Dead wrong.
9-30-2008 @ 6:16PM
Michael Jackson said...
This stock is a big disappointment - its like Fruit of the Loom - just a place to waste your money. I would have been better off using the money at the Dog track instead of investing it into Sirius
10-01-2008 @ 9:51AM
WAGS said...
Yes you are right this stock is a disappointment... but dont be stupid the whole market is crap..we are all loosing money but there is not reason to cry about it...you of all people (the investers) should know the buying stock is never a sure money maker...but i beleive in this company and I am almost positive things will turn around for the better!