Stocks Under $1: Blockbuster, SIRIUS XM, and On2 Technologies (BBI, SIRI, ONT)
Noteworthy stocks that are trading under one dollar this week include Blockbuster Inc. (NYSE:BBI) , Sirius XM Radio Inc. (NASDAQ:SIRI), and On2 Technologies, Inc. (AMEX:ONT).
On2 Technologies, Inc. (AMEX:ONT) shares are up 13.8% in 2010 and the stock touched a 52-week high of 75 cents earlier this month on news that Google Inc. (NASDAQ:GOOG) wants to buyout the company.
|Ticker||Company name||Price||Change||Chg %||Mkt Cap|
|SIRI||Sirius XM Radio Inc.||$0.693||-0.010||-1.39%||2.67B|
|ONT||On2 Technologies, Inc.||$0.694||-0.028||-3.93%||122.59M|
On2 Technologies, Inc. (NYSE Amex: ONT) and Google Inc. (NASDAQ: GOOG) announced this month that they have agreed to amend the merger agreement under which Google will acquire On2. Under the revised terms, each outstanding share of On2 common stock will receive 0.0010 of a share of Google Class A Common Stock for each share of On2 common stock, as previously announced by On2 and Google, plus an additional $0.15 per share in cash consideration.
The revisions to the terms of the merger agreement serve, in part, to address the fact that, since the acquisition was first announced in August 2009, the market value of Google's Class A Common Stock has increased significantly while the value of the acquisition has remained fixed for On2's stockholders. By increasing the consideration offered to On2's stockholders by an additional $0.15 per share in cash, On2's stockholders will receive additional value for their On2common stock that Google and On2 believe better reflects the value that On2's stockholders would have received had the acquisition closed closer to the time of its announcement in August 2009.
This increase in the consideration that Google is offering to On2's stockholders constitutes Google's final offer.
Sirius XM Radio Inc. (NASDAQ:SIRI) shares have jumped almost 20% in the past month thanks the company reporting free cash flow at over $100 million for 2009 and adding 257,028 subscribers in Q4 2009.
Sirius has gotten back on the right track since it got a $530 million capital infusion from Liberty Media Corp. Improvements in vehicle sales from multidecade lows also have helped the company. On a pro forma basis, free cash flow was a negative $552 million in 2008.
"This is the first year in our history that we have generated positive free cash flow for the entire year. Our fourth-quarter subscriber results mark two consecutive quarters of net subscriber additions for Sirius XM and are the highest since the third quarter of 2008," Chief Executive Mel Karmazin said. "Improvements in automotive sales, conversion rates and better-than-anticipated self-pay churn suggest that the outlook for the auto sector and the effects of the economy on our business are beginning to improve."
With those promising signs, Sirius expects to meet its financial guidance for 2009.
Last is the bearish tale of Blockbuster Inc. (NYSE:BBI), unlike the other 'penny stocks' mentioned in this article, BBI has the most to prove to Wall Street. Friday Blockbuster shares closed at 40 Cents, and the fall began when Blockbuster (BBI) reported last week that EBITDA for 2009 to $195 to $205 million which comes out to a net loss of $183 to $193 million. Consumers and Wall Street are not "being kind" to ol' Blockbuster despite their latest advertising and increased inventory efforts.
Last week Analysts at Janney Capital Markets downgraded Blockbuster (NYSE: BBI) to “neutral.” The fair value for BBI has been reduced to $0.75. The analysts mention that while the news is bad, the bigger concern is that the new guidance “implies that in-store rental comps have actually gotten incrementally worse since 3Q09 despite the aforementioned improvements… Essentially, it appears BBI is losing more market share than expected.” Janney Capital Markets has reduced its EPS estimates for 2009 and 2010 from $(0.72) to $(0.95) and from $(0.20) to $(0.58), respectively.
Best of luck playing the stocks under $1 that are still listed on the major exchanges, either these stocks are a future 10x bagger or they are headed for a slow death on the OTC BB exchange. Happy Safe Investing.