Did you catch the SEC filing by Sirius XM Radio (NASDAQ:SIRI) this week announcing a delay in filing its annual report?
If so, at least one passage in the Form 12b-25 should jump out at you:
Management has not yet completed its evaluation as to whether substantial doubt exists relative to the Company's ability to continue as a going concern for a reasonable period of time.
It is usually auditors that toss about the "going concern" term, but Sirius XM is apparently trying to beat its bean counters to the punch.
It's easy to see why Sirius XM is finding it hard to defend its life. It may have scored a juicy $530 million capital infusion from Liberty Media (NASDAQ:LINTA), but there are more strings attached there than at a marionette factory. Investors initially applauded February's infusion, but it technically only bought the company another three more months.
Sirius XM is a long-distance hurdler with an eating disorder. And by that I mean that every time the satellite radio operator clears a major debt refinancing hurdle, it seems to stop long enough to wolf down a burger or two. The end result is that Sirius XM will only be heavier in its attempt to clear the next hurdle.
The company can't catch a break -- even a commercial break -- these days. Key automaker partners like Ford (NYSE:F) and General Motors (NYSE:GM) aren't moving cars, so that will eat into gross additions. Consumers are scaling back on subscription entertainment services like TiVo (NASDAQ:TIVO) and DISH Network (NASDAQ:DISH), providing a gloomy backdrop for gross deletions.
This doesn't mean that it's curtains for Sirius XM. I recently outlined satellite radio's advantages over cheaper audio alternatives, and it's hard to write off a service with 18.9 million subscribers.
Unfortunately, it's clear that if Sirius XM gets out of 2009 alive, it's going to be a lot heavier. Between the stock dilution and higher interest rates on its refinanced debt, it's not a very healthy diet for a hurdler.
We're now just 11 days from a very important quarterly earnings conference call at Sirius XM. Let's hope that by then the company can express its confidence in a going concern.
Instead of concerns about where it's going.
More news than static on Sirius XM:
