Sirius(SIRI) Could Easily Become A Penny Stock

According to Doug McIntyre at 24/7 Wall Street, there are some reasons to believe that Sirius could trade under $1 by the end of the year.

Sirius is up against several events which could push even more of the current investors out of the shares.

1. Sirius could find that in its merger with XM Satellite (XMSR) the amount of money that can be cut out in a merger is below forecasts. The integration of the two companies might also take longer than forecast.
2. Sirius could find that after the merger is complete that refinancing the combined long-term debt of the company, about $2.5 billion, is nearly impossible in a poor credit market. At the very least, Sirius might have to pay extraordinarily high interest rates or dilute current shareholders.
3. Satellite radio growth rates, already slowing, could drop even further. Most subscriptions come from new car sales. With the auto industry experiencing a tremendous drop-off in sales, Sirius could be badly hurt. Competing products like the Apple (AAPL) iPod and multi-media phones are already undermining Sirius sales.
4. Sirius could loss key management. Now that CEO Mel Karmazin has finished the transaction to combine the two companies and is approaching his 65th birthday, he might elect to leave and have the board bring in someone with more restructuring experience. Investors might well balk at that.

Sirius could easily become a penny stock, and it may not take very long.

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Please Note!
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