Sirius Slides on Note Sale

Shares in Sirius Satellite Radio (SIRI Quote) slipped 4% Friday after the highflying tech shop sold $250 million of convertible notes.

The New York-based company said it sold the five-year notes, which pay 2.5% interest, to an institutional investor in a private placement. The company said the notes effectively convert to Sirius stock at $4.41 each. Convertible note offerings tend to pressure stock prices because they offer the prospect of shareholder dilution.

Shares in Sirius and its Washington, D.C.-based rival, XM Satellite Radio (XMSR Quote), have surged to triple-digit percentage gains over the past year as investors flock to their high-octane growth story. The companies broadcast around 100 channels of mostly commercial-free radio programming and sell subscriptions for about $10-$15 a month. The shares have gained momentum as Sirius and XM have reported rapid subscriber growth, aided by partnerships with the big domestic and foreign carmakers.

Shares in both companies slid Friday, though, Sirius dropping 15 cents to $2.96 and XM sliding 70 cents to $21.69. Both companies have attracted large short followings with their rapid cash-burning and tiny revenue numbers. Even so, investors remain intrigued: Sirius' convertible bond offer Friday was originally slated as a $200 million sale.