Sirius Satellite Radio, the US subscription-based, digital-quality radio service, saw its shares plunge a vertiginous 44% Wednesday, bottoming at 76 cents, little more than one percent of their $66.50 peak in 2000.
The trigger for the fall was the company’s second quarter results, posting a sharply widened loss at $124.6 million (€126.78m; £81.08m), up from a $72 million loss in the same period last year. Quarterly revenues were $70,000 with just $50,000 of that sum accruing from subscribers, the remainder from advertising. As the service did not launch until Q4 2001, year-on-year data does not exist.
In its filing with the Securities and Exchange Commission, Sirius warned: “If we fail to timely raise additional funds, we will be forced to seek protection under the US bankruptcy code, materially reduce our operations, significantly alter our business plan and/or seek the sale of our company.”
According to Sirius evp/cfo John Scelfo, at the end of the June quarter the company had cash reserves of $327m – enough to see it through to Q2 next year. Yet the mood at Sirius remains upbeat. It claims it is in negotiation with existing backers and other stakeholders for additional funding and has hired UBS Warburg to assist it in pursuing various financial options.
Quoth homily-prone president/ceo Joe Clayton in a conference call to analysts: “In times such as these, you conserve cash and you raise cash to fund your core business.”
Data sourced from: AdAge.com; additional content by WARC staff