LCAPA) had saved Sirius last year by extending credit. Liberty has also been the subject of chatter that it could buy the struggling satellite radio company and save it from the stock market. At this point, those rumors are unfounded, and investors shouldn't bet on such a transaction. Sirius would be an expensive acquisition and may be out of the reach of Liberty, which already shoulders a large amount of debt. The decline yesterday looks odd in light of its timing. Perhaps short sellers, who bet on share-price declines, depressed the stock. Relevant news that could have hurt the stock was a ratings downgrade by Wunderlich Securities, a small firm with limited influence.
Sirius' rabid fan base may point to the stock-price decline as evidence of manipulation. The effect of a reverse split, in theory, shouldn't alter the value of a company, since the process merely changes the divisor of the market value. In reality, reverse splits can signal desperation. Then again, a reverse split would make the company more attractive to institutions that have restrictions against investing in stocks with prices below $5. As a result, Sirius could gain larger investor base if the stock price rises high enough. Nevertheless, the next 10 days will be crucial for Sirius.
-- Reported by David MacDougall in Boston.