Sirius XM (SIRI) And The Potential Reverse Split

By: Tyler Savery Thursday, October 08, 2009 9:41 AM

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As readers are well aware, NASDAQ delisting 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.

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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 (SIRI) 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.

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If there has to be a reverse split I think it should be a 1-for-10...that would get the price to where it is still attractive to the potential investor, but most importantly it would be more attractive to fund Managers to buy for Fund portfolios. I am not in favor of a reverse split at all, but....this is if it has to happen....right? In a perfect World, some of the good news would be taken into account and drive the price up, as it should be...and all the bashers and short interests would pack their bags and go fight in some foreign Country (for America) where they could actually do some good with their pathetic lives.

Rating: (2) (0)

10/8/2009 1:33:46 PM

No Reverse Split by william

Most companies that undergo reverse splits are NOT successful! SIRIUS should hold tight and only as a last resort have a 1 for 2 split.

Rating: (4) (0)

I'm with you William. Every reverse split is an invitation to the shorts and in this case it would be a feeding frenzy. If absolutly necessary limit the split to a 1 for 2. If that proves to be not enough then have another 1 for 2 split

10/8/2009 2:22:49 PM

operations by bruce schimkusq

yes 1 for 5 would be a good split I think, 1 for 50 would not be a good split in my opinion, we will see were we go in the next year or so im sure !

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10/8/2009 3:24:32 PM

by Joe

10 to 1 or 20 to 1. It helps take out the shorting. A lot less shares to be shorted. If they provide value, the stock will pop, as instutional buyers jump in. It could be a majical run....

Rating: (2) (0)

10/8/2009 4:31:22 PM

by siriusaldo

no reverse split, it should be the last resort, if mel will do something to get
the street, wsj, 24/7, and the fools, to get off our back with all their Bs,
and do some advertising blitz siri will be over a dollar in no time specially with the new skydock

Rating: (1) (0)

10/8/2009 5:03:15 PM

by Greg hughes

Sirius has destroyed two companies by merging with XM. My friend Yimmy Norden is being paid slave labor wages while Sirius pays out millions to no talents like Martha Stewart, Oprah, and Howard Stern.

Reverse split at 50 to 1 and watch the shorts bring it right back to .50 to .60

Rating: (1) (1)

10/8/2009 5:45:47 PM

by Leo

I have never seen a reverse stock split work in the favor of the investor. If the management team in place now had been doing their job, their would not need for a reverse split. If your going to have a reverse split, then kick out the old management team and bring in a totally new one along with it.

Rating: (1) (0)

10/8/2009 8:20:31 PM

CEO by Jordan

If this stick Splits, Everyone has to BAIL, the stock holders who have stock now will get buried, and the new investors will become rich..MY ADVICE: AS SOON AS I HEAR THE ANNOUNCEMENT FOR A REVERSE SPLIT, SELL, SELL SELL IMEDIATELY !!!!!!! THEN WATCH IT DROP AGAIN, AND BUY BACK..
HOPEFULLY, WE WILL NOT SEE A SPLIT , BUT BY 4TH QUARTER IF WERE NOT AT A DOLLAR, FEBRUARY 1ST, SELL SELL SELL, MAYBE EVEN BY JANUARY, SELL SELL SELL, I HOPE THEY DON'T SPLIT AND REACH A DOLLAR BY THEN.......

Rating: (1) (1)

I've never owned shares that have reverse split. Are shareholders given notice in time to make a decision or is it a surprise when it actually happens.

10/8/2009 8:59:25 PM

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10/8/2009 11:43:51 PM

How about writing this story. Decimal place scandal by RKeane

Tyler,

Are you Rick Aristotle now. The only problem with Sirius XM Radio is the news media collusion that has attacked Sirius XM radio.

A R/S will be done only if necessary to stay within the guidelines. What we need to do is expose the news media for their involvement in the Wall Street Scandal and the decimal place scandal by Goldman Sachs. The news media all made a secret deal in a failed attempted to bankrupt Sirius Xm radio by naked short selling it. They failed, yet the news media is still attacking, hoping to force a reverse split.

The game is almost up for Goldman Sachs and the collusion of the news media as the truth is starting to come out.

You are a fool to believe anything other that what has taken place with the news media in their attacks on Sirius XM Radio.

They will continue to naked short Sirius XM Radio and attack it thru the news media until the SEC and the government steps in to stop the biggest scandal in the history of the United States.

Hollywood is going to finally expose the news media and their collusion and their working together with Goldman Sachs and Wall Street in their failed attempts to ruin the next new Power House media Company, which is going to be Sirius Xm Radio inc.

How about writing that story in your next article, similar to the Matt Taibbi story in the rollng Stones, but take it to the next step. The decimal place scandal by Goldman Sachs in the manipulation of Sirus XM Radio's stock price using their secret software and super fast computers to the tune of maing over $100 million dollars a day. How about telling that story.

Richard Keane

Rating: (1) (0)

10/9/2009 9:06:02 AM

by siriuslee

1 for 10 (if we have no other choice) Looks like mel wants to do a split as he hasn't talked to anyone in the media about the last round of b/s put out there.

Rating: (0) (0)

10/9/2009 11:47:30 AM

I've never owned shares that have reverse split. Are shareholders given notice in time to make a decision or is it a surprise when it actually happens.

Rating: () ()

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The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.

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