Is a Reverse Split on the Horizon for Sirius XM?
Sirius XM Radio is trading below the $1.00 price required by NASDAQ to maintain listing status. The company is still on NASDAQ thanks to a suspension of the minimum price requirement by NASDAQ on two occasions. The second suspension of of the NASDAQ requirements expires in August of this year. So is there a danger that Sirius XM will be delisted in August? NO, NOT AT ALL.
If NASDAQ does not extend the grace period a third time, notices will go out in mid August. A company receiving notice will get an automatic six month extension in which they can try to come into compliance. One requirement for the six month extension is that the company have measures in place to come into compliance. Sirius XM has a reverse split already approved by shareholders, and thus, has the tool in place to gain compliance should they need it.
The six month extension would take Sirius XM into the Spring of 2010, but the company can also appeal the delisting and gain even more time to try to come into compliance. In effect, Sirius XM could delay a reverse split for nearly a year from today, and thus immediate worries of a reverse split are virtually unfounded at this point.
One reason investors tend to worry about reverse splits is the fact that companies who use them are typically companies that are in financial troubles. A classic example of why investors worry can be found in the recent reverse split conducted by insurance and banking giant AIG. The company enacted a reverse split, and promptly lost half of their value again after the reverse split occurred. AIG is still far from being out of trouble, so it is no surprise that the price per share is still taking a beating.
For Sirius XM, a reverse split at this point would be very dangerous for investors, which is exactly why investors in this equity can breathe a sigh of relief in knowing that a forced reverse split to maintain NASDAQ compliance is still a long way off. The company is showing signs of offering better financials, but there is still a lot of question on the street surrounding the company, and shades of doubt are a perfect breeding ground for taking down the stock price of an equity.
If Sirius XM is able to produce better financials over the course of the next year, they may be able to climb above the $1.00 per share mark and avoid a reverse split altogether. That is the best case situation. If they do not get over $1.00, they need to be able to produce good numbers and remove doubt. This is where the company can get an assist from Father Time. One year is a long time, and during that period, we may actually see a recovery in the auto channel. Combine good financial performance with an improved OEM channel, and merger synergies realized, and it is possible that this is one reverse split that could break the negative trend we often see when companies need to make that such a move.
Simply stated, Sirius XM needs to be on their strongest possible footing if and when the time comes that they conduct a reverse split, but to worry about it now is premature.
Position – Long Sirius XM, No Position AIG
Tyler, couple things on this one… I’ve researched this one quite heavily.
There are no “requirements” for gaining the first 6 month extension. That is automatically given to all companies that become non-compliant.
Companies can appeal the delisting process and be given a second 6 month extension — but in order to get that, they are then required to have measures in place to get the minimum bid back up above $1… those measures MUST include a reverse split plan. They are then given a second 180 day extension. At the end of that extension, if the bid is still below $1 — then they must execute the reverse split plan or be delisted.
I estimated the dates and timeline earlier this year after the last suspension extension. Here’s a cut and paste of those dates. The dating here should be pretty close… and assumes that companies use the extensions to their fullest length:
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Stocks with Bid’s below $1 at the close on 7/20 will start a 30-business day compliancy clock (no notice). If a company is still below $1 at the close on August 28th — stocks will be considered deficient and sent a notice.
Once a stock is deficient, they are automatically given a 180-day compliancy period – where they have to close above $1 for 10-days straight; Sirius will be required by the SEC to publically file this with the SEC and announce it to the public. This compliancy period will then end approximately February 24, 2010.
If still deficient after this 180-day period, they can request a hearing and present a plan to get it above $1 (which must include an option to reverse split) — and be granted an additional 180-day compliancy period – where again, they have to close above $1 for 10-days straight. This compliancy period will end on August 22, 2010.
If after August 22, 2010 (or thereabouts) they are still below $1 — they can then be delisted from NASDAQ.
———
homer,
blah, blah, blah….no offense to you because you are 100% right, but I have been hearing this for a year now…
btw, tyler also appears substantially correct here, too.
I am just a little sick that this simple topic is confused by practically everyone.
you, tyler and I can’t be the only one that understands this, can we? maybe so.
At the end of all this, it’s a real leap of faith to believe that Sirius-XM’s situation will have improved enough to avoid delisting.
SIRI’s OEM channel is dead and buried.
China passes US auto market in first-half sales
BahBah…. you are a miserable person….there’s no need for faith here…it’s all in the math… Sirius will be above 1.00 by Q3 of this year -easily… I hope you have bought into the stock where it is now….cause it is only going up – yes it may go down to below .40 while you shorts munipulate it once again – but after Q2 numbers it is all but up…who is paying you for all this negative stuff – Murdoch…
Keep Dreaming.
The stock is at 39 cents and dropping. 😛
There is NO way SIRI will ever make it past $1.00 per share in 2009.
Hell, it’s doubtful it will EVER make it past $1.00 per share.
The company doesn’t turn a profit and NOTHING will change that in this economy.
SIRI is destined to be a ne’er-do-well company until new blood is in charge and they actually learn to value their customers.
Murdoch?
wise one – are you writing here as well?
BahBah, you are making money on buying the stock when it’s down and selling when it rises. So your neg. comments have a self serving purpose which may work for you but you are so obvious it’s laughable! If I’m wrong you wouldn’t be blogging so much negativity.
Mass hysteria, dogs and cats, people living together…..
Sirius is about to cross the streams………!
All this clutter talk sounds of farm animals at lunch time
what?
This “non viable” company just sent up a very expensive toy into space
Bahhhhhh bah booy cramer boy
Do you think they launched a new rocket because the Russians have nothing else to do and they all ready paid for the damn thing- or are they serious? no pun intended
Do you think ole Mel got a raise for what is about to happen?
or are you Mike Myers ready to include sirius in your movie?
Elvis,
If you know anything about Satellite technology you’d know that it certainly has other uses besides SatRad.
The only reason that Satellite went up is because Malone wants it up there.
If you believe SIRI is a great company, show me ONE SINGLE THING, that is verifiable fact, that demonstrates SIRI WILL make a profit.
Right now, it’s all wishful thinking and a lot of praying from the SIRI cheerleaders.
The only thing SIRI has going for it right now is that Malone temporarily removed the “Sword of Damocles” regarding it’s debt.
SIRI still has debt to pay and it is NOT clear that they can or will be able to pay it when it comes due.
Satellites are indeed bent pipes — they can be used for more than just satellite radio. Afterall, they just send out 1’s and 0’s.
However, the satellite is limited to its designated frequency. In this case, it receives in the x-band and transmits in the s-band. And cannot be changed.
Furthermore, the portion of the s-band that it is in — is only allocated for DARS. Not likely to be changed anytime soon. It will take an act of Congress to change it.
So if you think that Malone is going to use the satellite for anything other than DARS, then you are mistaken. The satellite can only be used in the s-band — and currently only for DARS. Regardless of who uses it for that purpose.
Changing the allocation to something is not any easy process — with no guarantee. Especially given the conditions that Sirius and XM had to agree to (from the FCC) in order to merge. Do they just reneg on that deal so that Malone can do something else with the satellite and frequency?
Sorry, disagree.
——–
I wonder if Malone & Liberty Media has anything to do with shorting this stock?
I’ll bet after the end of this year comes and Liberty acquires their 40% stake in Sirius/Xm, this stock will move past the 1.00 pps mark!
Rbx
Malone already has his 40 percent stake, and is prohibited from hedging his position.
correction Tyler . . I believe that Malone/Liberty Media is only prohibited from opening a short-hedge against his preferred shares until January 1, 2010 . . . after that, all bets are off
boo boo doesn’t have a cent in this company. he did but he lost it all which explains his chronic negative spin on anything and everything this company does or makes the news for. this company will be over $1.00 by October. Buy now or be a life long whiner like boo boo. 🙂
The iPhone app alone should generate at least 3 million (conservative) per month in revenue.
bob,
You are clearly delusional.
There is simply NOTHING upon which you can make an accurate claim of revenue based on the iPhone app.
Sirius-XM hasn’t released ANY figures about retention after the 7 day trial.
They could have 10 million downloads.
It’s meaningless if no one buys a subscription.
Any claim you make is simply wishful thinking.
Well you can wish in one hand and @#$! in the other and see which one gets filled first. 😛
This company is a perpetual penny stock until the company ultimately goes tits up.
BAhBah
bob is clearly delusional!!!you are correct…cannot count on 1 dime from Iphone app…with that being said…take it to the bank…1st year of Iphone app…60-80M revenue at a minimum IMHO.
Remember…your the one who said…”any claim you make is simply wishful thinking” so your claim that “this company is a perpetual penny stock until the compan ultimately goes tits up” is just that…wishful thinking!
Bah-Bah is a ‘sour-soul’ who, although allowed and welcomed for debating purposes, publishes only the contrarian opinion regarding this Co. and it’s stock; actually ‘revels’ in the thus far negative plight of it’s protagonistic-investors…………not a ‘nice’ person…….@#!%$$#……..Phuck Him!!
What you are forgetting is that the reverse split, if it is to occur will have to commence prior to the end of this year as stated in the Annual Meeting of Stockholders report dated Dec 18, 2008. See below.
The second amendment permits the Board of Directors of SIRIUS XM at any time prior to December 31, 2009 to effect a reverse stock split of SIRIUS XM common stock by a ratio of not less than one-for-ten and not more than one-for-fifty, with the exact ratio to be determined by the SIRIUS XM Board of Directors at its discretion. The second amendment also allows for a reduction of the number of authorized shares of SIRIUS XM common stock as described in the proxy statement for the Annual Meeting.
Dwight
new date is 6/30/2010. Was voted on at annual meeting on 5/26 i believe. Better check all of the latest company filings before posting…some can be pretty viscious when you FU.
WaWaBooey –
How close is Sirius to becoming cash flow positive for the year ? The answer is very close.
Now let’s take a look at a few things they are doing that will bring them in a ton more revenue over the next 12 months and beyond.
$3/month extra for internet if you have a sub. – let’s say 20% or 3.6 million subs take this – this is 10.8 M/month or ~ 130 M revenue they never had.
July 29th increase of $ 2 for royalties for primary subs, $ 1 for family subs. Family subs or 20% or 3.6 M X $1.00 X 12 mos = ~ 44M revenue. ~ 15 M subs @ 2.00 X 12 mos = $ 360M revenue.
130M – internet streaming
404M for royalty increase
Total of ~ 500M in new revenue & this is without growth, which should start to happen again in the 4th Q. I see the 3rd Q as a break even on subs. Also keep in mind that the upfront revenue from Ford & Chrysler & other OEM deals will include the extra $ 2/month. Costs continue to be cut, deals like the IPHONE app basically have 0 subsidies, so the ARPU jumps and the SAC drops.
Can you say CASH COW ?
1.00 easy in 6 months.
SXM
If you just take your figure for 6 months ending in Dec 09…another 265M to COH…I firmly believe that SiriusXM will be very close to FCF! Gotta love it!
Don’t forget…with OEM rebounding slightly…combined with CPO program…I believe that you can safely use 11-11.5M as auto sales in calculating Siri subs numbers!
Disclaimer- still gives Mel time to FU again!
sxminvestor,
There are some HUGE leaps of faith you are making.
Allow me to point out some problems with your wishful thinking.
1) SIRI is on pace to lose at least 1.6 Million subs this year alone. In the final analysis it will be over 3 million.
2) You seem to think that price increase don’t have any effect on sub numbers. The fact is sub will decrease, in part, due to these increases in fees.
3) The economy is in a prolonged recession and any rebound will be temporary and minimal.
4) Consumer confidence is at its worst level in a very long time. The latest numbers caught the Obama administration off-guard.
Luxury purchases are taking a huge hit in this recession and SIRI is a luxury.
Believe what you want.
If you think SIRI is a good buy then I’d hate to read any business plan you put together.
A couple of factors for you to consider —
1. No way will the internet option be 20%… less than half of that;
2. Churn will increase due to the price increase. How high remains to be seen;
3. Not every sub will have their price go up on July 29th… a significant amount of the subs are “prepaid”. Prepaid subs are grandfathered in until its time to renew. The price increase will be a gradual increase to revenue over the course of the next 12-18 months.
Example, I have one sub up for renewal in September — which I’m canceling due to the price increases. Not out of anger or anything like that… it’s just no longer worth it. Because it’s going to hit with 2 price inreases at the same time. The increase on family subs and the pass through increase. It’s no longer worth keeping to me. I have a second sub, but that doesn’t renew for another 18 months.
In both cases, the July 29th increase will not hit immediately.
—-
You’ve got two grat points and no matter how many slam Baa-Baa, his stateement of failed leadership and shitty programming and NOT valuing the customer/subscriber are DEAD ON.
That’s the crux of the matter and untill they get a grip on this VERY SIMPLE concept they are doomed to run what once was the greatest thing in radio (in many years) straight into the ground.
However some of these genius’ on this site will rationalize anything in their quest to squeeze another cent rise in the stock. They’re unbelievable and can’t possibly live in the real world.
Sorry for my typos………
I strained my wrist changing out a motorcycle tire!!!
Some people still have do things themselves in order to save a buck!!!
boo boo….try to read this slowly and comprehend. i never stated that the revenue figure was a fact. but it’s absurd to think that over a million people dl’d that app and none of them subscribed. there is revenue from it. we just don’t know how much yet. thus the reason i stated it was a conservative guess. you go ahead and crap in both your own hands and i’ll just stand back and watch you fill em both. 🙂
38 cents and dropping.
Call me anything you want as long as you call me CORRECT! 😛
Even a broken watch is right once every day boo boo. The entire market is down. I guess you’re a genius. Is every company on the exchange going to tank too? 🙂
bob,
The phrase is “even a broken clock is right TWICE a day”.
I’m willing to bet your GPA was 2.0
You communicate with all the skill of a remarkable C student. 😛
I personally know of 3-subscribers from the i-phone download…………………leave the nay-sayers alone…………….just watch the proof will be in the pudding !!
This company is without a doubt a bet up/sideways stepchild-
If sirius had held back info about the million downloads from iphone-you would be screaming-and wall st would sell
If sirius released the information with 500,000 downloads-same thing would happen
If sirius had waited until they could release sub numbers as a direct result from those downloads-it would be too long a silence from the company-and the stock would fall-
So, they did the right thing as you have been asking and released that info as a press release re downloads monday-They gave you something to chew on
So, the stock is sliding on WEAK numbers trading this wk-people are on vacation which it seems to me some of you should do as well.
Time to get that pickanic basket out -boo boo and relax.
And to futher stoke you bah bah- you are as correct as you are good looking.
Elvis,
You are really reaching now.
The stock is sliding because people are on vacation?
Do you actually believe that?
WTF????
SIRI closed @ 37 cents.
Oh yeah, this stock is a real winner. 😛
BAHBAH,
It is when you bought at 0.10 cents. I guess I was lucky. One day sentiment on the street when change and when it does look out. One day this will be a big winner. If you are looking to trade for the short term (good luck) as this stock will drive you crazy. But with the content and music there is no way siri will fail at this point. Going forward this is a strong buy but you must be patient and have a time horizon. Mine is between 5-10 years. GLTA
That’s what you’ve been waiting for so you’ll be buying Sirius Xm stock Monday.
If anyone watched what happened to AIG’s stock after it’s recent reverse stock split they will have a good idea what happens usually with reverse stock splits.
I’m not trying to compare Sirius to AIG but in general reverse splits usually act the same way. For anyone that didn’t see what happened should look it up. They reversed the share price back up to roughly $20 a share and it immediately got hammered back down to $12 a share a will probably continue to drop.
So yes, you are able to maintain Nasdaq listing and the share price will be above $1 but the implications to current holders is potentially devastating.
But hey, that’s what the majority of us voted for. Yippee.
Of course its in the cards. This stock is a joke. Im down 20k on this POS.
I sell used cars. I’m doing my part in adding subs buy signing deals with new SXM subscribers. I set up the free 3 month account for them before they leave with the car. So, don’t forget about this new revenue stream. At least half the cars I sell every month have the receiver pre-installed. We have at least 50+ salesmen at my store alone and well over 60+ location. Now combine that number buy ALL other used car companies in this country. I think you get my point. Regardless to the slowdown in subscriptions from new cars this past year, you have to take into consideration the number of recycled SXM receivers there are that will continue to bring about new growth. You can look at this as a growth model or retention model. The fact is this has huge potential implications! Used car companies will get a cut for every new sub activated. Win win for both companies.
Long siri
I’m going there again, “Idle Radio Land”or “The Land of Misfit Toys” or maybe even a place where rational thinking is irrational it’s called “The Twilight Zone”. Yes I’m a pain in the ass, so if you don’t want to read my argument then X out (just kidding, please read on).
If Sirius Xm were to turn on all idle sat. radios for free and instead of standard commercials they would just have hourly sponsorships I think it would be a disaster to say the least. Why you ask? Because most people would quit paying and get it for free, right, a little blurb mentioning the sponsor a few times an hour? So this helps make my case for firing up the idle radios with a standard free commercial based format with LIMITED content. Know comes the problem of the FCC and following regulations of free radio. Well as I mentioned in the past you really don’t give it away for free, you would charge a small yearly fee of say a few bucks( to cover music royalty costs). Know you could argue that terrestrial radio is totally free, so what you do to offset that issue is to have a minimal amount of commercials, say half of what am/fm air. Some of which would be promoting what you COULD receive as a full paid Sirius Xm subscriber. So you are killing a few birds with one stone. One would be generating some limited advertising revenue. Two, you would be using your 15 million or more idle radios to try to entice listeners to move up to a full subscription. Last but not least you would be putting a world of hurt on terrestrial radio. If this rough plan was carefully implemented and then promoted I think it would make Sirius Xm a true powerhouse. I believe it would be a hit w/ the consumers and Wall Street. I just can’t see, leaving the (paid for by Sirius Xm) idle radios off when they can serve a real purpose. Oops! Gotta go I see on my caller ID that Rod Serling is calling.