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http://quote.fool.com/news/symbolnews.asp?guid={05449A31-E802-466D-A460-D4A638F3AFD6}&currticker=siri&symbols=siri&nx=&bx=

Debt converted to equity, $200 million in new cash, current shareholders get diluted 92%.

Fool on,
Tom9
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...current shareholders get diluted 92%.

I don't think the restructuring caused shareholders to get dilated as much as other initiatives did. There were definitely missteps by management in their executive which effectively drove the stock price into the ground. Current shareholders did get screwed, but it was more so due to other market factors like mismanaging the street and analysts, poorly marketing the product and not having a good hardware assortment in the aftermarket.

Apparently the market is happy with the new company, it may be a good time to get in over the next 6 months considering the company has zero debt and is poised for strong subscriber growth in 2003.

Jeff
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There were definitely missteps by management in their executive which effectively drove the stock price into the ground.

Should read in their 'execution'...

Jeff
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Debt converted to equity, $200 million in new cash, current shareholders get diluted 92%.

Woah, ho! A whopping 92% dilution? And most of you guys thought this was a good investment?

Anyhow.... I've got to say, my biggest complaints about not investing in Sirius have vanished. While a 92% dilution certainly isn't good news for existing shareholders, the lack of debt and extra cash are absolutely imperative for the company just to survive. The likelihood of more share dilution is far less now than before this news was announced. Heck, I wouldn't be surprised if the price of Sirius went UP on the news, because now this company has a real fighting chance of a long and maybe even prosperous future.

I'm still not going to invest my money into a money-losing venture, and there are still risks involved. Even in that press release there's a great quote explaining the risks ahead: . The additional $200 million, combined with the approximately $240 million cash currently on-hand, is expected to give Sirius sufficient cash to operate into the second quarter of 2004, based upon its current business plan. Furthermore, the company continues to evaluate initiatives that could enable it to achieve cash flow breakeven without raising additional funds.

There's only enough cash to get through Q2 of 2004 before they'll have to start taking on debt again or dilute shares. And if XMSR continues to trounce SIRI with subscriber growth, this company may never reach profitability or may take much longer.

It's still risky, but this is a FAR better situation than before!

-- Ryan
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Mark,
You were absolutely correct, and I was wrong. I sold this stock at $0.92 when it was announced that 50 radio stations would be broadcasting digital radio signals within the next 3 months using technology developed by ibiquity -- a private company. In other words, I sold it because this new development altered my perception of the business outlook for Sirius (and XMSR), not because I was afraid that Leon Black and a bunch of other corrupt power brokers were going to be able to hose all of the existing shareholders. However, it is obvious now that this is exactly what is going to happen. I hope existing shareholders who will own 8% of the company sell their share to the scumbags who intend to steal a 92% share for themselves, so that the scumbags will then own 100% of this trash and they'll be flushed down the drain where they belong when Sirius satellite radio fails. Even if digital radio doesn't make satellite radio obsolete, if consumers knew that their subscription dollars would be enriching scum bags, I don't think they would subscribe. If this company's history of mismanagement and corruption gets the attention it deserves from the SEC, maybe that would bring Sirius' dirty laundry to consumers' attention as well.
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not because I was afraid that Leon Black and a bunch of other corrupt power brokers were going to be able to hose all of the existing shareholders

They didn't hose down anyone. Money doesn't come for free, and Sirius needed a LOT of money. What did you expect? You only had to read their financial statements to see a major shareholder dilution would HAVE to occur for this company to survive. And hey, 8% of a company that might make a profit someday is better than 100% of a company that goes bankrupt.

Current shareholders should be glad these folks came to save their butt! (I wouldn't have, had I had several hundred million bucks to throw around.) I wouldn't be surprised if the short holding the Fool has on Sirius is sold. The company can still go out of business, but it's not the "sure short" that it was before, and holding a short on this company is far more risky than before.

Nope, things are definitely looking up for Sirius. At no point has their future looked as bright as it does today.

-- Ryan
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MHolt, sorry to hear you lost money. Being right about this company didn't do me much good, I lost money when I shorted it (too early as usual). My opinion on the people who run this company comes down somewhere between Ryan's and yours. I agree with Ryan that most, if not all, of what they did was legal and sort of ethical. By the same token, there is no way I would ever want to invest money alongside a group of people like this.

I have always been convinced that David Margolis never expected to get as far as he did with this concept, nor did he have to since he was getting paid with OPM and would have made out okay if Sirius had failed anywhere along the way. I will give him credit though, at least he put together a real company with a real product. Many of the actual scamsters (and they were legion back in the late 90's) didn't even bother to make that effort. At least investors in this company have a fighting chance. But this company demonstrates the truth of a principle I've long believed in: never invest in the "Next Great Thing" until, and unless, it actually becomes the "Next Great Thing". If the company is for real, it's not going to be too late once they've proven themselves. Warren Buffett probably put it best, and it's particularly appropriate for this company:

In studying the investments we have made in both subsidiary companies and common stocks, you will see that we favor businesses and industries unlikely to experience major change. The reason for that is simple: Making either type of purchase, we are searching for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now. A fast-changing industry environment may offer the chance for huge wins, but it precludes the certainty we seek.

I should emphasize that, as citizens, Charlie and I welcome change: Fresh ideas, new products, innovative processes and the like cause our country's standard of living to rise, and that's clearly good. As investors, however, our reaction to a fermenting industry is much like our attitude toward space exploration: We applaud the endeavor but prefer to skip the ride.


My .02 as this story plays itself out.
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