Thursday, December 28, 2006

Sirius Bankruptcy Rumors

A couple of blogs have jumped on the bandwagon discussing a Sirius bankruptcy, claiming that this would be the only option to get out from under the debt load. Despite scant credentials, these bloggers, who are certainly entitled to their opinions, seem to influence traders in a market where momentum rules. Perhaps these guys don't understand the satellite radio subscription model. The business is based on the highly successful cable and satellite TV and cellular carrier formats, which started out in exactly the same way, very high upfront costs, high debt, and significant competitive threats, until they became profitable.

It's certainly been a disappointing year for investors in the sector, but, unless there's something that I'm missing, bankruptcy does not usually immediately proceed CFBE.