A combination of crippling debt, heavy losses and unfashionable products are three big strikes against these five stocks: Sirius XM Radio (SIRI, news, msgs), Procera Networks (PKT, news, msgs), Clearwire (CLWR, news, msgs), Advanced Micro Devices (AMD, news, msgs) and Eastman Kodak (EK, news, msgs).
The slouching economy hasn't done these teetering companies any favors. And whether the blame lies with the recession or simple frugality, neither companies nor consumers have shown much interest in spending money on tech.
With less money coming in, weaker players with unsound finances could easily get swamped by another nasty market downturn, especially if creditors abandon big risks.
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These five tech stocks, which aren't exactly shipshape, will face big trouble should the market turn stormy again:
No. 1: Sirius XM Radio
Tech's hottest cash fire has reduced its stock to embers.The satellite radio shop has plunged deeply into red ink, accumulating a total deficit of $9.46 billion. Given that Sirius shares are trading at around 50 cents, it's obvious that investors aren't confident that pay radio stock has much upside.
Sirius lost customers for the first time ever in the first quarter and is on track to lose 1.6 million subscribers this year. Free cash flow for the first quarter was a negative $4 million. With so much riding on new car sales, Sirius faces big challenges this year.
A likely scenario is that Sirius will collapse into the arms of its lifeline creditor and big debt holder Liberty Media (LMDIA, news, msgs), owner of DirecTV (DTV, news, msgs).
With friends like Liberty Media waiting in the wings, Sirius equity holders have reason to worry.
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No. 2: Procera
This network security software developer loses $2 for every $1 in sales it brings in. It competes against networking giants like Cisco Systems (CSCO, news, msgs) and Juniper Networks (JNPR, news, msgs).Procera burned through $3 million in cash a quarter last year and had $4.8 million remaining as of September. In a bid to stay afloat, Procera arranged a $3 million line of credit with a Palo Alto, Calif., company called The Private Bank. "We believe our business has reached the point where bank financing is a prudent next step for funding," the company said in a press release.
In May, the company raised $1.8 million in a very dilutive private placement sale of 4.6 million shares of stock.
Prudent investors might not want to wait around for the next next step.
Continued: Clearly a catastrophe
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