Sunday, April 02, 2006

Sirius Share Count

This write up is intended to clarify an issue that people often get confused about, or is often misrepresented.

People may often see the term outstanding shares.

Outstanding shares is defined as:

"The shares of stock that a corporation has issued and not reacquired are described as its outstanding or existing shares. These are the shares in the marketplace available for trading. A corporation's market capitalization is figured by multiplying its outstanding shares by the market price of one share."

For Sirius the outstanding share count is about 1.389 billion shares.

People will also see the term Fully Diluted Share Count.

Fully diluted share count is defined as:

The number of shares that the company has registered for sale.

For Sirius the Fully Diluted Share Count is 1.77 billion shares. Investors should always be aware of current Outstanding Shares, the Fully Diluted Share Count, and the Authorized Shares.

The difference between the Outstanding Shares and the Fully Diluted Shares for Sirius is about 381,000,000 shares. These shares are currently in the hands of Sirius (on the shelf), and can be put onto the market at any time.

If these shares go onto the market, the Outstanding Share Count gets larger, and the value per share theoretically goes down. This is because the value of the company is now divided by a larger number of shares.

Authorized Shares is the number of shares that the company is authorized to issue. In Sirius’ case, the Authorized Share Count is about 2.5 billion shares. The difference between the Authorized Share Count and the Fully Diluted Shares is about 730,000,000 shares. If Sirius were to do a secondary offering, they would tap into these shares. This would increase the Fully Diluted Share Count. Such an offering would be filed with the SEC.

Dilution is a term used for when a company issues more shares. The additional shares hitting the market in effect dilutes the share pool. There are a few types of dilution to consider. The first is the issuing of shares from the Fully Diluted Share Count. These shares have already been registered to be put onto the market, and can be used in relative short order if the company decided to use the shares. Companies often have shares “on the shelf” for the purpose of funding operations, or paying for other deals. For example, the shares issued to Howard Stern by Sirius came “off of the shelf”. When those shares were issued, the Outstanding Share Count went up, and the number of shares “on the shelf” went down. There was no change to the Fully Diluted Share Count. A Secondary Offering is the form of dilution that is the bigger concern. A Secondary Offering means that the company is increasing the number of Fully Diluted Shares. Sometimes funds from a secondary are used right away, sometimes they are used to increase the number of shares “on the shelf”.

In the most recent conference calls, analysts have asked whether or not Sirius is “Fully Funded”. This question is basically asking the company whether or not they will need to dilute the stock any further in order to operate. Sirius has stated that they are fully funded to operate under the current business plan.

With Sirius, the important thing to note is this:

There are approximately 1.389 billion Outstanding Shares
There are approximately 1.77 billion Fully Diluted Shares
There are approximately 2.5 billion Authorized Shares

The definitions and explanations in this write up were intended to simplify the language relating to this subject. SSG offers no opinion as to the current share counts for Sirius. SSG suggest that investors seek the help of a qualified Financial Advisor when considering any investments.

The link to this write up is: http://tinyurl.com/mwj5u

4/02/2006 09:04:00 PM

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