Originally Posted by
Newman
I'll grant you that the initial plumet was Mel and Co's fault, due to the "ugly financing". Credit markets had already started to dry up, even though the banks had not started failing. The sub-prime market was already crashing and banks knew they were going to get hit - and hit HARD.
Had Mel and Co not taken the ugly financing, there are some - many - that say this merger would have never happened because the money for it would not be there. I am in agreement with this group. Had the merge happened back in January of 08, we would be GOLDEN. It didnt, it happened in July 2008, and because of this, Mel had to take on ugly financing. If the merger would have been approved in September of 2008, we would still be two seperate companies because no money would be available to buy out the XM converts to prevent the change of control clause. My opinion.
So Sirius XM took on toxic financing and dropped the share price. But then, the credit markets crumbled. Lehman went BK and a number of other banks were bought out for pennies on the dollar. The economy took a great big dump. That has affected Sirius XM as well. The entire 90% drop is not attributable to toxic financing alone, and cannot be attributed simply to the managment. Apple has dropped 60%. Google had dropped something like 50%. All of these are huge companies that could buy Sirius XM with free cash on hand and not even bat an eye. So why are they down? Poor or inept managment? Of course not. With the exception of Steve Job's illness, there is no reason that any of these companies should be in the crapper. (Edit: Sorry, had to edit this when I realized what I said about Yahoo's managment not being inept. They are idiots, please forgive the analogy.)
Now, it is tough to compare Sirius XM to Google or Apple simply because of the metrics. That is why Google is not down 90%. Google is profitable, Sirius XM isnt. Google is debt free, Sirius XM isn't. So Google is profitable and debt free, yet they are still down 60%. Now can you see a reason that Sirius XM might possibly be down 90% WITHOUT your conspiracy theory?
Sirius XM is a great company with a great product with a great business model... Any other time in history, banks would be throwing money at them left and right, but right now in one of the biggest credit meltdowns of our lifetime, there is no money to be found. Unless you have over a 700 credit rating, most people cannot even get financed for a $50,000 vehicle. Sirius XM has to refinance just under $1 billion in debt. Times are very tough right now... but it is not all managment's fault.
As far as Cramer goes, that is a totally different animal all together. Perhaps it is Cramer and Co. who are killing this thing instead of Mel and co. Ever thought of that?