"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.
