As I noted on Yahoo earlier tonight... the $5.7 billion in Goodwill on the balance sheet is the purchase price that Sirius paid for XM. They will be amortizing this $5.7 billion to the earnings statement over the next 40 years... approximately $35 million per quarter, if my math is correct.
FWIW, no you wouldn't include the Goodwill in the theoretical Book Value -- in a liquidation of assets... however, if the company were to be sold again, via a private sale or merger -- it WOULD be included. So yes, in a liquidation situation... the book value would be negative. However, in a sale situation... the Goodwill would still be included, therefore the $1.59 per share Book Value is still relevant (stockholders equity / shares outstanding... 4,714,068,000 / 2,971,234,786 = $1.586).
Furthermore, it is my opinion that a combined value of $1.3 billion for the S-Band licenses that XM and Sirius have is still massively undervalued. Prior to the merger the combined value was $225 million; now the Pro Forma value is just under $1.4 billion. Spectrum auctions today for 25MHz of bandwidth would go for significantly more. If this company were liquidated today -- this bandwidth will go for significantly more than $1.4 billion.
So it comes down to the "intangible book value" versus the "tangible book value"... if the company were sold tomorow, then I believe that there would still be some intagible value -- based on the Goodwill -- that would enter into the value of the company... taking it higher than the current "intangible book value". However, if it were liquidated tomorrow -- then it would be a negative number, based on current figures... however, as I further noted... I do not believe that the correct valuation of the spectrum/license has been placed. It would likely be valued higher... so the "tangible book value" (which is currently negative) would likely be higher too. How much? Depends on what the spectrum would end up going for... a lot higher than $1.4 billion, IMHO.
Yes, I have been pointing out that Sirius is trading under its book value ever since the merger closed. I was surprised by this, but never made a big deal over it because much of it was due to the Goodwill being amortized in the financials. Bears have a good arguement that it is only that high because of the Goodwill -- but Bulls can point out that in a sale, Goodwill would still be included, as well as point out that the FCC licenses are still way undervalued. I chose just to leave it alone... rather than trying to argue the Bull side. Most wouldn't understand it, let alone believe it.