Wednesday, May 09, 2007

Virgin Disappoints

Virgin Media Inc (Nasdaq:VMED) released disappointing news. The press release leads with nine (9) highlights. The last one refers to the large losses that are being incurred. Corporate spin doctors were probably hoping that you might stop reading around the third or fourth point. Real investors continue reading until they find mention of the bottom line.

For a brand which is supposedly fresh and exciting they seem to have all the standard problems incurred by the industry segments that they operate in. As a matter of fact they seem to have all the problems that each industry segment seems to have. This begs the question "Why are they here?"

To make matters worse BSkyB has pulled their basic channels and more subscription cancellations are to be expected.

Maybe they are waiting for the proverbial takeover offer? But to entice the offer from someone with money you need to be growing and causing problems in your competitive space. Right now Virgin Media is not trouble except for shareholders. Given its very high debt levels and negative cash flows the lenders are feeling very ill over the future. The cherry is not worth plucking.