Sirius XM faces a possible delisting

Sirius said in the statement it intends to maintain its listing, and if the stock price doesn't reach the required level it could effect a reverse stock split at a ratio of not less than 1-for-10 and not more than 1-for-50, which was already approved by stockholders in May. While the statement says the board would put into effect the split only if it's in the best interest of shareholders, that question is up in the air.

Sirius shares closed at 69 cents Thursday, which is really a long way from the 52-week low of 5 cents a share, but also not that near the 52-week high of $1.08. Year-to-date, SIRI shares have climbed 474%. While investors may want to believe the momentum will continue, shares have traded around this level for about a month now and no catalyst is in the horizon to keep them moving higher.

While the reverse split could save Sirius from delisting, such a move usually carries the stigma of desperation and more often the share price falls after the split. The most recent example is AIG's (NYSE: AIG) 1-for-20 reverse stock split in July. The same day the shares fell over 10% and remained there for about a month. While AIG stock eventually recovered -- no doubt partly due to the expectation of government support -- such examples are many.

As for the long term, there are also many examples of companies trying this tactic, gaining perhaps short-term breathing room, but failing in the long-term. Nortel, which recently went belly up, did a 1-for-10 reverse stock split in 2006.

The problems at Sirius are fundamental. For years it has struggled financially while losing more and more of its competitive advantage as MP3 players and phones with media became more prevalent. Not only that, it relies on car sales to get many of its new customers, and everyone knows how car sales did the past year. Sirius needs to spend more energy on its business and less worrying about its stock price.