Wednesday, September 10, 2008

Shares in 1Worldspace dip below a dollar

I see that shares in Worldspace (WRSP) have dropped below US$1.00 dollar a share. Remember when they started trading publicly in August 2005 at $24.10 a share? The official Worldspace press releases still say they are the "only global satellite communications company positioned to offer crystal-clear radio to listeners in more than 130 countries", yet the number of global subscribers is a mere 171,657 up by 187from the previous quarter. They have announced a cessation of marketing efforts in India and other parts of the world ahead of the Company’s efforts to launch its mobile service in Europe in 2009. In India, the Company gained 2,283 net subscribers during the second quarter of 2008, even with substantially reduced marketing spend in that region. 1worldspace ended the period with 164,309 subscribers in India, compared with 162,026 at the end of the first quarter of 2008.

Now the focus seems to be on building a "terrestrial repeater network in Germany. The repeaters will work in conjunction with the 1worldspace existing satellite network to provide German consumers with a subscription-based satellite radio service to automobiles, starting sometime in 2009".

On July 24, 2008 1worldspace secured $20 million of subordinated financing from Yenura Pte. Ltd., a company controlled by Noah Samara, chairman and CEO of 1worldspace. Approximately $18.5 million was used to meet the terms of the July 25, 2008 financing terms reached with its investors, leaving approximately $1.5 million to make certain payments owed to vendors and other persons.

For the second quarter of 2008, 1worldspace reported revenues of approximately $3.3 million, a slight increase over revenues of approximately $3.0 million for the first quarter of 2008. Subscription revenue was approximately $1.8 million for the second quarter of 2008, compared with approximately $1.9 million in the second quarter of 2007. On a sequential basis, subscription revenues in the first quarter of 2008 were approximately $1.7 million.

Operating Expenses

Total operating expenses for the second quarter of 2008 were $33.1 million, a 26.5% decline from operating expenses of $45.0 million in the second quarter of 2007, primarily reflecting reduced marketing activity in India, as well as decreased compensation and lower professional and legal fees in the 2008 period.

As of June 30, 2008, the Company had cash and cash equivalents of $1.2 million, along with restricted cash and investments of approximately $4.8 million, compared with $2.0 million and $5.6 million, respectively, as of March 31, 2008.

Anyone can see that these numbers are unsustainable. They are definitely "Lost in Space"

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