Sirius (SIRI): Down To $.45, Off Nearly 90%

October 8, 2008 by Douglas A. McIntyre

Siri_2The dirge is just about over for Sirius XM (SIRI). The stock has marched down so far that the market is saying there is little prospect for recovery. The company is plagued by a combination of two things it cannot escape: tremendous debt and a business which has lost most of its growth prospects.

Shares in Sirius hit $.45, down from a 52-week high of $3.94.

There is merit in looking at the stock price of Sirius compared with GM (GM) over the last year. Sirius gets most of its subscriptions from new car sales. That market is locked up due to a combination of high gas prices, falling employment, lack of credit for car loans, and the general economic malaise.

Over the past 12 months, GM is off 80% and and Sirius is down more than 85%. It is likely that in the next two quarters, Sirius will announce that its subscriber growth has all but disappeared.

Sirius has more than $2 billion in debt. That could not be refinanced today. Conditions may improve between now and the end of the year, but no one would give out odds on that.

Satellite radio may live on, but the Sirius shareholders are dead.

Douglas A. McIntyre