Sirius XM Calls Nasdaq's Bluff

"I got a letter from the government the other day.
I opened and read it. It said they were suckers."
 -- Public Enemy's "Black Steel in the Hour of Chaos"

Sirius XM Radio (Nasdaq: SIRI  ) received a letter it expected yesterday. After failing to close with a bid price at or above the $1 mark for 10 consecutive trading days by March 15, it is in violation of Nasdaq OMX Group's (Nasdaq: NDAQ  ) listing requirements.

The satellite-radio operator's response is also not a shocker. It will schedule a hearing to appeal the process, buying it as much as 180 more days to be in compliance if successful. It is exactly what CEO Mel Karmazin said the company would do during last month's quarterly conference call.

Whether or not Sirius XM is able to comply with the $1 share price requirement by then is open for debate. It should have a pair of strong quarters along the way, so I'm inclined to like its chances given the longer leash.

However, even if it somehow doesn't make the cut, Sirius XM is calling out Nasdaq's delisting process by tooting its own horn. In yesterday's press release, the satrad star makes points that many of us have been saying all along:

  • Sirius XM's equity value of $5.8 billion is greater than 92% of the Nasdaq-listed companies, and its $8.8 billion in enterprise value may dwarf even more stocks.
  • The satellite-radio titan scored $2.5 billion in revenue last year.
  • Its public float of 3.7 billion shares makes it a regular on the exchange's actively traded list.
  • In an ironic twist, Sirius was tapped to join the Nasdaq Q-50 Index over the weekend. Other new additions include Rambus (Nasdaq: RMBS  ) , Windstream (Nasdaq: WIN  ) , and Micron Technology (Nasdaq: MU  ) on a list that represents the 50 most likely securities to be included in the next NASDAQ-100 Index update.

In other words, Sirius XM is too big -- and important -- for Nasdaq to boot off its exchange for something that a token reverse split would correct. It's time for the exchange to incorporate market cap exceptions to its delisting requirements.

I'm betting on Nasdaq doing exactly that -- and well before Sirius XM becomes a delisting victim.

Will Nasdaq delist Sirius XM if it isn't in compliance after the appeal process? Share your thoughts in the comments box below.

Nasdaq OMX Group is a Motley Fool Inside Value pick. Motley Fool Options has recommended a write covered calls position on Nasdaq OMX Group. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 18, 2010, at 12:24 PM, Cool700 wrote:

    SIRI WILL NOT BE DELISTED.

  • Report this Comment On March 18, 2010, at 1:03 PM, mikecart1 wrote:

    SIRI will either hit $1.00 again within 6 months or be de-listed. This is a 50/50 shot at either making mad money or getting mad at no money.

    I am betting $1.00 even though I think SIRI is garbage as a stock, company, and as an organization.

  • Report this Comment On March 18, 2010, at 1:23 PM, DJDynamicNC wrote:

    Whether you love or hate SIRI - and it seems there isn't a middle ground - you have to admit that there's virtually zero chance of Nasdaq sniffing their noses at the trading fees the satrad company has been earning for the market. One way or another, SIRI is going to stay listed.

  • Report this Comment On March 18, 2010, at 2:34 PM, diggerjj wrote:

    YOU CAN DO IT

    #1 don't sell

    #2 sell only above the last price

    it's your company, make it what you want it to be

  • Report this Comment On March 20, 2010, at 11:28 AM, superdave1459 wrote:

    Better yet what NASDAQ should do is FORCE any company under a $1 to do a reverse split. If the company is viable it will survive, if it isn't it will end up back where it started, sub $1.

    Reading how evil reverse splits are is the cart before the horse, the tanking of reverse split stocks is the result of a bad business to begin with. Look at the cos. that have done them and still survive. This is a test to finally prove sat radio is for real or just the last of the dot-bombs.

    My bet is sat radio is doomed. It was supposed to be profitable with 6 million subs, Mel et al obviously didn't have a grasp on their projection prowess and understanding of their business. with 16 million subs leaving over lsat three years and still generating losses, it is obvious the business plan is a miserable failure. Time will prove it.

  • Report this Comment On March 20, 2010, at 11:29 AM, superdave1459 wrote:

    Better yet what NASDAQ should do is FORCE any company under a $1 to do a reverse split. If the company is viable it will survive, if it isn't it will end up back where it started, sub $1.

    Reading how evil reverse splits are is the cart before the horse, the tanking of reverse split stocks is the result of a bad business to begin with. Look at the cos. that have done them and still survive. This is a test to finally prove sat radio is for real or just the last of the dot-bombs.

    My bet is sat radio is doomed. It was supposed to be profitable with 6 million subs, Mel et al obviously didn't have a grasp on their projection prowess and understanding of their business. with 16 million subs leaving over lsat three years and still generating losses, it is obvious the business plan is a miserable failure. Time will prove it.

  • Report this Comment On March 24, 2010, at 12:15 PM, red1789 wrote:

    i am in college i have very little money right now should i buy some siri stock right ? i love Sirius too but i think its going to do great or fail

  • Report this Comment On April 03, 2010, at 12:45 AM, georcole wrote:

    @red1789,

    Your lack of capitalization and punctuation makes me think you might be in third grade, not college.

    As to your question about buying SIRI, you have not provided enough information for anybody to be able to give you advice on what to do with the little money you have. Do you have credit card debt? Are you using student loans to pay for college or have you arranged for it to be paid entirely off by the time you graduate? Do you have a car payment? If you have any debt at this point, you should try to eliminate that as soon as possible. If your credit card charges 18% interest, I guarantee you that by putting extra money towards paying it off you will get an 18% return on your money. If you were to instead put that money into a speculative stock like SIRI, you could make a killing or lose everything. The choice is yours. I do not have to live with your choice on this particular matter.

    By the way, I am a high school drop out, so if my capitalization and punctuation is not up to college standards, I'm sorry.

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