Sirius XM and the Potential Reverse Split
As readers are well aware, NASDAQ de-listing notices have recently been forwarded to companies that are not in compliance with the $1 minimum bid requirement for continued listing on the exchange. On August 3rd, the minimum bid rule, which had been suspended since 2008, went back into effect.
There are three possible scenarios which can play out: 1) the stock rises above $1 by March 15, 2010 for ten consecutive trading days, and the company does nothing; 2) the SEC / NASDAQ changes the listing requirements to enable companies like Sirius XM, with their substantial equity value, to remain listed despite being below $1; or 3) the company executes a reverse split in order to bring the nominal share price above $1.
Simply stated, Sirius XM needs the equity price above $1.00 to remain listed unless regulators grant a waiver. Last year, shareholders granted the company the authority to conduct a reverse split if the company believes it is in shareholders’ best interests, and at this year’s shareholder meeting that authority was extended to the company through mid-2010.
Mel Karmazin has clearly stated that he does not want to do a reverse split unless compelled to do so, but the reality is that the time clock is now ticking and regulators may not grant an exception, so it is an issue that investors and the company should begin considering. Today, I would like to encourage discussion about the mechanics of the reverse split to get a gauge of what level investors feel the company should consider and why.
I would like readers to consider various options and open up discussion as to why you have the opinion you do. I am well aware that there are many who may not want a reverse split at all, but I ask you to participate as well. The point of this discussion is to guage feedback about what ratio should be set assuming a reverse split does indeed happen more than whether or not there should be one. This will allow for discussion and dialogue, and it is a subject I will be covering in my Satellite Standard Weekly Report.
Many media companies trade in a range between $15 and $25. Should Sirius XM try to be in that trading range? Should they shoot for a lower number to keep an attractiveness to retail investors? Should they shoot for a price that is higher to build a cushion? These are more psychological questions than anything, and there is probably no exact right answer.
Think about the pricing that the equity should be at rather than the conversion. A reverse split is a reverse split, so the ratio matters little. The question is what “market” and price point would suit Sirius XM radio the best?
I would like to see as many people as possible weigh in on this in the comments section so that we can gauge an opinion to see where the sentiment of investors is at with regard to this subject.
75% retail ownership…
The anouncement of a rs would send the masses out the door including me. at 61 average, i’ll be ok and recover my investment when I bail out at the sign of a rs.
after the dust settles and we are left with a 20-30 cent sp, what kind of split numbers are needed. 10 to 1 is dreaming.
i’m not interested in finding out and will see you guys on the other side.
4th qtr conference call is my time tolerance for this stock. if it is not at a buck, i will have agressive stops in place and very itchy fingers. i’ll leave with as much as i can
Spencer, Spencer, Spencer,
We all know about the possible r/s, but with all the negetive
media attention lately the timeing for this discussion is bad.
People are selling off their stock because of all the fear based thinking from bad press lately… I lost thousands of dollars and took a 50% loss back in Feb because I was a newbie to the stock market back then and I paniced and lost big time… yesterday my siri stock was down by $10,000 so I have a vested interest in what happens to SIRI stock price and Negetive thoughts create negetive results… Mel already said ” He Will NOT Do a Reverse Stock Split anytime soon” on the last conference call… To me that means at least not this year in 2009… Besides Mel is gonna do what ever Mel thinks is best for the stock holders… Obviously he doesn’t think it’s in the stock holders interest anytime soon to do a stock split otherwise he would have already done it… So why talk about this publicly right now after the big beat down we’ve all taken the last few days… I just want SIRI to start trading like it normally does around earnings time and the stock goes up instead of hanging around in the 50 cent range because of all the fear and uncertainty in the air… I say do all the homework you need to do so that you are prepaired for the future but, now is not the time for a public forum on this subject because the stock price is so low right now… Besides do you really think what you or I think is gonna have any impact on what kind of reverse stock split or when it will happen… NO, Mel is the CEO, and I would have to assume he already knows exactly when and if any R/S will or will not happen… Giving more attention to it right now only keeps the fear around longer because I’d bet 90% of us stock holders would prefer that no R/S happens anytime soon…
The media would love it.You can all picture the headlines from the Sreet and Motley already and they would be non-stop.
The short raid on SiriusXM after the reverse it as sure as the sun coming up tomorrow.
It would be as ugly and nasty as the loan that gave away 40 percent of the company and the drop to pennies that we saw earlier this year. That is your R/S
Just depends on what Mel is trying to achieve? Screw over the stockholders? Make it cheap for Liberty to steal?
Take it private?
Or does he manage the company and get it over a buck by the end of the year?
Only Mel knows what he is trying to acheive and as stockholders we have nothing to say about the future of what will happen to this company.
imho
vaporgold
Reverse split is necessary to attract the institutional ownership that will move the stock higher. 10:1.
Biggest problem of SIRI is that there has been little leveraging of the technology to attract new subscribers beyond the auto market. I am dissapointed that video has not been exploited for instance.
This company has way too much overhead to be profitable on such a low subscriber base. More out of the box innovative thinking is necessary to save this company.
I love the product but that does not mean it is a good business.
56 cents and dropping and still there are cheerleaders wishing for the impossible.
Sirius-XM WILL execute the split and it will be futile.
They are destined to be delisted.
The recent executive sell-off couldn’t have come at a worse time.
It shows clearly that their own executives are shorts at heart.
Sirius-XM continues to lose subscribers and NOT turn a profit.
Bankruptcy is inevitable.
Hi BahBah Booey, Got any Cramer?
My personal feelings with a mere 6400 shares invested @ 1.80 a share, would be very rewarding after this long wait.
I agree Gary.
Great to see you participating Boo Boo, always a treat to hear from an actual NAMBLA representative. Go back to mommies basement tool boy.
54 cents and DROPPING.
Go back to pulling your pud Krypto.
It’s obvious you know less than nothing about what makes a successful business.
i know for most companies that a reverse split usually doesnt work well since those companies are usually in dire shape–Priceline is one exception that comes to mind–
This company has way too many shares outstanding so this alone is good to reduce–If the balance sheet is truly getting so much better and the company is in the black from a point on shortly, this could really work well–They need to be capitalized well so that they dont look to issue more shares and add billions again–I dont think this would happen until next year–The 3rd and 4th Q are critical as if they show real good improvements, this issue may be irrevelant
My son and I bought this stock a long ways back. We don’t have plans to just bail now. I’m sorry to say, this bickering about a great company who has been melted and chip away at by the shorts!
Now the shorts are backing the company hmm? Wonder what this means.
David Fox
NOTE: moderators, excuse me using wrong information with my first comment. I had my password user saver for Firefox brought real old info. Take care, have a nice day!
Do the split and get it over with. 1 to 10 split would be great. $5 – $7 range is perfect point for Sirius stock and we need to get out of the billion shares outstanding group. Thanks
wE ARE STILL ON THIS?
When are these new rules against naked short selling supposed to take effect?
I still belive the R/S is inevitable, and will happen before year end. I do not think any company wants 3.85B shares floating around as it just dilutes the investors and company. 380M shares would not be out of line so look for a 10:1 R/S minimum, but the new price would be low enough for the price to be shorted to less than $1.00, so a 20-50:1 R/S could be better in the long run. I sold all 65K shares a few weeks back at .70 and pulled a slight profit, but nothing big, as the R/S is closer than we think. Good luck
How can you say the sp will be cut back down to less than $1.00 after a 10:1 split??????
What you are saying is that the company will then have a market value less than $380 million.
NOT POSSIBLE!!!
The insider selling had nothing to do with confidence. It was a bonus that had to be sold. They all have many times more shares than the few that were sold. I read an explanation somewhere to that effect. There is also an extra six months that they can ask for that is almost automatically granted. Wait for the sub numbers in Q3 & Q4, buy back shares and we are on our way. The negative liars will head for cover after good numbers continue to come out in one of the worst recessions we have ever had.
It has EVERYTHING to do with confidence.
Sirius isn’t out of the woods and the executives are seen as shorts in waiting.
WRONG!!!!
The share sales were mandatory,,,, they were considered as part of their pay……
You know it & you’re spreading fear……………
Please…
Try reading and comprehending.
It is perception versus reality.
No need to spread fear about Sirius-XM.
Mel Karmazin has done a great job of that all by himself.
The way I see it, with the current “bear” trend of SIRI, I don’t think they will have time to get the equity up to $1 for 10 consecutive trading days. 3Q results are out in the beginning of November. IMO, if they don’t exceed expectations, a R/S is likely. I simply don’t believe that there is enough time to wait for 4Q results, and who knows what the results will be.
What a lousy week for SIRI.
Spencer – your a little behind.
Where is your SkyDock article ?
SXM…..
scoll down and you will see it
please write a new article and get this off the main page
Man – what a momentum killer! This article has “churn” written all over it.
Not only is this article nonsense,,,, But to use it to open a discussion on a r/s…..
It has only brought the conversation back to whether or not Sirius will survive which is insane……….
9 months ago everyone wanted to hang MEL because he was driving the company into BK, or trying to take it private, or too old to know what he’s doing,,etc,,etc,,etc,,
Now the sp is 10X higher than it was at the height of the fear.
This company is going nowhere but up. Trust in MEL! If a r/s split is going to happen it will be on his terms. Like after a big debt refi, or after a big Q report…..A way to kill the shorts, with big institutional investors lined up…….. How about the sp takes a small hit and then skyrockets to a $10 BILLION market cap,,,,,,,WHERE IT SHOULD BE……
START A CONVERSATION ON THOSE POSSIBILITIES………..
sd… Um, what is Mel waiting for? More synergies??
10x higher than the $.05?? What about 1000x lower than when Melvin became Sirius Shyster-in-Chief??
I don’t get the question, Mel isn’t waiting for anything, he’s doing what needs to be done NOW!
SIRI has traded on hype and speculation since day one….. it was manipulated UP to $9 for stern just like it’s being held down now. SIRI trades with ZERO speculation & hope for the future now vs. nothing BUT back then. Wait till’ the business plan is proved good in the next 2 cc reports.
Sirius may not become another rocket like Microsoft with 80% of the population using it, but it won’t fall flat on its face either. There is some percentage of people like me that will keep it no matter what.
Now, with Toyota FINALLY putting XM radios in their cars with pre-paid subscriptions, we wll see what the final long term user tally will be (~30% maybe). That should be enough to get all the investors back to positive and maybe some profit to boot.
What comes to my attention when I read most of the comments the last several weeks regarding SIRI’s resurgence from its complete equity collapse in February is three things: Firstly, that Sirius XM has made tremendous strides in its recovery despite heavy share dilution potential with Liberty’s liquidity rescue in almost every way it can from debt restructuring, to its subscription retention during a period of potential Armageddon for the auto industry as well as the credit system during this historic recession, as well as its phenomenal positioning in its relation to Apple through its app and its new SkyDock as it relates to new potential revenue beyond the auto industry. All of this points to a positive future after a tough, costly merger before the floor in the economy collapsed. Secondly, I’ve been following the markets for some time, and I’m not sure I’ve ever seen a stock so heavily disparaged through media -particularly Motley Fool and thestreet.com and even the Wall Street Journal. I consider the Wall Street Journal legitimate media, but found a recent online article misleading, under-informed, and manipulative in its intention and connotation (article regarding insider selling). Unfortunately, it was approaching negative propaganda as the misleading subjective articles by the websites mentioned above have reached. Polls are paper thin, not objective informational reporting. The article on the extreme decrease in short positions in SIRI over the last two weeks are facts that point to antithetical truth to the propagated false information regarding the health and viability of Sirius XM as a company. The truth regarding the company is that things are dramatically improving coming into 3Q. Thirdly, its clear that Sirius XM needs to do a better job representing itself through the media -in its relation to the market as well as the consumer through two direct means- direct, addressing of false information regarding the company by the CEO or through official press releases directly by the company, and two through advertising directly to the consumer beyond programming releases. It’s got a phenomenal product. It has a huge future. It needs to do a much better job of defending itself beyond all of the good things it’s doing for itself as an American company. Considering its equity is under the immediate gun of being under 1.00, this is a critical window to shore up the momentum it’s gained. Thanks.
Everyone just needs to chill out. Do you remember when you actually had to get off the couch to change the T.V channel? What a beating.. Do you remember when people were complaining about the cost of cable in relation to having to jack with your rabbit ears to get your four channels? Now everyone pays for cable because it is superior. I don’t know what the SIRI stock price does tomorrow, but I do know management is taking the right steps to move this company into the 21st century and the content is far superior. I get to listen to FOX while I’m driving. Pretty darn cool. Siri has T.V, Radio, Weather and navigation for aircraft and listening material for Liberals, Conservatives and independents. In 10 years if you still own SIRI you will be up 10,000%. In 1890 if 200 people left NY for LA 25% of the people died.. Now, you eat breakfast in NY lunch in LA and dinner in NY. Technology is great and the technological advances in this century will be mind boggling and satellite and really everything to do with Tech will be in every household in every country period. Long SIRI!!
I would like to see something positive come from whatever they do. I paid $35 a share for XM stock way back when the market was running strong and a year or so after GM announced they were putting satellite radio in all their new cars. At one point XM had 6 million subscribers and was in a race with Sirius to make it 9 million who only had like 3 million subscribers at the time. What caused such a gutting of the XM stock is not truly known other than some people thought the stock had been inflated by the original founding members and sued to find out how or why their investment was falling faster than a rock dropped off a tall building. I am still at a loss as how Sirius could by XM when XM’s stock was in such better shape and always had been. How can you take a stock such as XM that has out performed the competition since its enception, merge it with Sirius whose death nell was paying Howard Stern that boat load of money, and think it is a good deal for the stock holder. Sirius’s stock had languished around the $3-$5 mark since I got involved with XM Radio. Who put up the money from Sirius to buy XM shouldn’t it have been the other way around?
My understanding is that Sirius actually has longer than March using various forms of postponments…and I’m not knowledgeable enought to name them. Does anyone else have that info?