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Sirius Debt problems
As the landscape in the big financial picture keeps changing, the level of concern by the street in the SIRI debt takes on a posture that simply would not have existed a year ago. The situation may have been far different if the merger process could have been shortened by only six months. People have oft tried to quantify exactly how much of a toll that the prolonged merger process has had on the company. In point of fact, that toll can not yet be quantified because the ramifications are still with us. Until this debt can be handled, the drag on the equity is still happening.
From a cash flow and revenue perspective the SIRI debt may have looked attractive to lenders only six months ago, but now times differ, and those would be lenders have more grave concerns on their minds. Simple survival precludes new business.
Whether you believe in the sector, or not does not really matter. The question at hand is whether Sirius XM Radio can either weather the storm, or get the financing handled in such a way that the cash flow model remains stable, or that is not dilutive to the stock. Only time will tell, but given the situation with potential suitors, the debt issue does not look to have a short term solution at this point unless Sirius steps to the table with a firm such as Goldman or Bank of America.
At this point the concerns with Sirius XM Radio may be more about the financials sector than with the operations of the company. In the past, it has been enough to simply worry about a company you invested in. Now, you have to worry about the companies that in the past have been the lenders as well.
There are likely still some rough roads ahead with the satellite radio sector, as well as any other sector. What is happening in the financials will have a trickle down effect. Right now those seeking lending are in a game of musical chairs. The difference from the past is that a lot of those that used to host the musical chairs game are now players in it as well.
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