Sirius mounts another defense of its stock price
Mar 13th 2009 12:40PM
Updated Dec 3rd 2009 10:35AM
Mel Karmazin, the CEO of Sirius XM (SIRI) is like a fireman rushing from house to house within his satellite radio company. Is the firm going bankrupt? Will someone take the company over and throw him out? Will car sales, which provide many of the new Sirius customer, drop so low that the firm will not be able to grow?
Karmazin's latest take on why Sirius stock has done so poorly is that there has been too much "doom and gloom" talk about the firm. That, in turn, hurt sales of satellite radios because people thought that the company might not make it.
According to The Wall Street Journal, "Sirius XM Satellite Radio Inc. Chief Executive Mel Karmazin blamed the company's poor fourth-quarter subscriber numbers in part on reports of the possibility, since averted, of the company's filing for bankruptcy."
Karmazin is conveniently forgetting a few things. The most important is that his company was close to bankruptcy. It had a large pool of debt coming due and little chance of refinancing it. The drop in new car sales, still the largest source of Sirius subscribers, was getting worse. And, SIRI shares were, at one point recently, trading at $.05.
Were customers right to be careful about buying products from Sirius? Of course. But, Mr. Karmazin does not think so.
Douglas A. McIntyre is an editor at 24/7 Wall St.