Although scarcely off the ground, Sirius Satellite Radio Inc. is having serious
problems convincing Wall Street that its satellite-powered radio service will
After announcing shaky second-quarter earnings this week, the company's stock
skyrocketed to $1.44 per share Thursday, up 89.5 percent
from the day before.
After Sirius had troubles launching and was surpassed by rival XM Satellite
Radio Holdings Inc., which launched nationally last November, Sirius has been unable to
persuade Wall Street that it is back on track, even though it brought in new top
management last December in CEO Joseph Clayton and launched nationally at the
beginning of July.
This week's statement that Sirius likely will need another $600 million cash
infusion over the next two years to stay in business has not helped the
company's standing, although Sirius said the disclosure is not news, but routine
information the company previously has included in its public statements.
Sirius is also pushing ahead with new car deals, announcing Thursday that BMW
of North America will offer its service in its line of "MINI" cars, in
addition to the BMW "3 Series," "5 Series" and "X5."
"We have a tremendous amount of momentum in the marketplace," Clayton said. "We are making significant progress in solidifying our balance sheet,
and I remain extremely confident that we will secure additional financing
Analysts believe the real test of satellite radio's appeal will come when
consumers can purchase a system as part of their new-car financing, making the
equipment purchase a small addition to a consumer's monthly car payment.
With a subscription to Sirius costing $12.95 per month, purchasers of upscale
cars like BMWs are not expected to be deterred from opting in.
Car manufacturers are only just beginning to offer satellite radio as an
option on new cars, so the next two quarters should be important indicators of
success for both satellite-radio companies.
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