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Friday, September 08, 2006

WorldSpace Delisting (WRSP)

WorldSpace is supposed to be the satellite radio system for the rest of the world. All of us who live outside North America and cannot use XM or Sirius. A few days ago, the company announced that is had received a delisting notice from Nasdaq. It had dropped below the minimum $50 million market value for Nasdaq when its stock hit about $2.50. The stock now trades at $3.14.

Early in August, the stock got down to $1.90. At that point it has lost 90% of its market cap since it had hit its 52-week high.

In the most recent reported quarter, which was announced in early August, the company had revenue of $3.8 million. That's all. Last year in the same quarter, the number was $2.3 million. The company's operating expenses in the most recent quarter were $46.9 million. So, if revenue goes up 15x and expenses stay the same, the company breaks even. But, the revenue is highly unlikely to get that high any time soon, and the expenses will not stay the same.

As of June 30, the company has $244 million of cash and securities and $155 million in debt. Contingent royalty obligations are $1.8 billion.

WorldSpace has a $120 million market cap. Based on its financials, that is probably too high.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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