Sirius (SIRI) Hits New Low, Waiting For Word

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Sirius (NASDAQ: SIRI) hit a new 52-week low today at $2.45. While The Justice Department gave its plan to merge with XM Satellite (NASDAQ: XMSR) an OK, there has been no news from the FCC. Some powerful members of Congress are still concerned the combination will create a monopoly.

Sirius has even deeper problems. The company has over $1 billion in debt on its balance sheet. In an environment were risky debt is poison, investors are clearly concerned about whether Sirius can survive in its present form, especially if a shrinking economy cuts into subscriber growth and widens the firm’s operating losses.

The FCC has, in essence, take Sirius from a company which had fairly good prospects to one which is on life support. In a sharp downturn, life support may not cut it.

Douglas A. McIntyre