SIRIUS SCRAPS 2001 LAUNCH, CEO RESIGNS
Problems continued mounting Tues. for Sirius Satellite Radio, which announced resignation of CEO David Margolese. Meanwhile, another senior executive confirmed company would miss its Dec. commercial launch target.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Sirius Senior Vp Doug Wilsterman said Margolese’s departure after 10 years as CEO was unrelated to latest delay in company’s commercial launch. Doubts about Sirius’s ability to start service in Dec. following several delays had caused value of company’s shares recently to hover near 52- week low of $2.53. Wilsterman echoed wording of resignation statement when he said Margolese, whom he praised as “visionary,” had been expected by company insiders to “pass the baton” to others when Sirius was ready to make transition to operational from developmental firm. Announcement said Margolese would remain non-executive board chmn., with his duties assumed by CFO John Scelfo and Gen. Counsel Patrick Donnelly until permanent replacement was found.
As for Dec. commercial launch of limited base of receivers, Wilsterman said it had been scrapped for variety of reasons, including economic factors such as decline in consumer confidence. Wilsterman said Sirius also wanted to wait to evaluate results of its in-vehicle testing program, which company said would be expanded to 6 additional markets by end of Oct. -- Columbia, S.C., Houston, Indianapolis, Miami, N.Y.C., Seattle. Sirius said expanded vehicle testing program represented final phase of tests, with company determining new commercial launch date only after completion. Wilsterman declined to discuss specifics, but company said it would update investors on status in conference call Nov. 14.
Revelations came only week after Sirius said it would vigorously defend class-action suit that alleged it had violated SEC rules by failing to disclose it wouldn’t be able to roll out service by end of 2000 or early 2001. It called claims “frivolous and without merit” and “entertaining piece of fiction.”
Margolese recently has had rocky relations with investor community over many delays and Sirius’s failure to land comprehensive receiver agreements with major automakers. Problems came to head last April when Margolese said fewer than 20,000 Sirius receivers would reach retail shelves this year, and only very late in 4th quarter. That revelation came in company’s 2nd conference call in as many weeks to “clarify” comments in earlier call in which Margolese and others counseled investors to act conservatively in buying Sirius shares because possible receiver delays would inhibit growth in consumer subscriptions for calendar 2001. Targeted Dec. launch date for limited quantities of Sirius receivers stood until company’s announcement Tues.