Posted on 02/16/2006 9:38:32 AM PST by presidio9
XM Satellite Radio Holdings Inc. posted a much wider loss in the fourth quarter on higher costs for marketing and acquiring subscribers. At the same time, a key director quit over disagreements about the company's direction, warning of a looming "crisis."
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Its shares sank $2.16, or 8.6 percent, to $23.09 in morning trading on the Nasdaq Stock Market, after briefly trading as low as $22.94. Their previous 52-week low was $23.01.
XM, the larger of the country's two satellite radio operators, reported Thursday a loss of $270.4 million, or $1.22 per share, after dividends for preferred stockholders, for the October-December period. In the same period a year earlier, the loss was $190.4 million, or 93 cents per share.
Revenue more than doubled to $177.1 million from $83.1 million. Analysts surveyed by Thomson Financial expected a loss of 92 cents per share on revenue of $174.1 million.
The Washington, D.C.-based company also disclosed in a regulatory filing that Pierce Roberts Jr. has stepped down as a director, citing strategic differences with other board members over the company's direction.
Roberts, a former chief telecom investment banker with Bear Stearns, had served as a director for five years and sat on all of the board's major committees.
In a letter to board chairman Gary Parsons, Roberts said he was "troubled" by the company's current path. "Given current course and speed there is, in my view, a significant chance of a crisis on the horizon," Roberts wrote. "Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now."
The company said in a statement accompanying the letter that its management and other directors disagreed with Roberts over how to balance growth versus cash flow, believing that it was important for the long term to keep up its rapid growth rate.
XM and its smaller rival, Sirius Satellite Radio Inc., are locked in a vicious, expensive battle to line up listeners and programming for their pay radio services, which currently cost about $13 a month and require a special receiver. Both offer dozens of channels of talk and news as well as commercial-free music.
Both have also racked up significant financial losses as they build their businesses, signing big-ticket contracts for programming with shock jock Howard Stern, Major League Baseball, talk show host Oprah Winfrey and others.
For the full year, XM posted a loss, after preferred dividends, of $675.3 million, or $3.07 per share, compared with $651.2 million, or $3.30 per share, last year. Revenue rose to $558.3 million from $244.4 million.
XM said it had more than 5.9 million subscribers at the end of 2005, up 84 percent from a year earlier, and said its total had risen to more than 6 million in the first week of January. Sirius has said it has more than 3 million subscribers.
XM's CEO Hugh Panero said in a statement that the company expects to reach profitability from its operations by the end of this year, with subscription revenues reaching $860 million. He also said he expects to have 9 million subscribers by the end of the year.
It's a race to see who is in the power position when XM and Sirius inevitably merge.
This is hugh and Sirius.
I had this for about 6 months, but decided to let it lapse. Great sound, but I found myself listening to classical stations a bunch because the other stations that I liked weren't playing the songs I wanted to hear. The '80s station, for example, played a whole lot of Duran Duran (mostly trash stuff of theirs) and a bunch of other stuff I've never heard of.
If its '80s and I've never heard of it, it didn't get played at all during that time or its bad. I can get decent classical over the air and I don't travel enough to justify the cost.
Merger with Gore's network could kill two turkeys with one stone.
It's too bad they can't manage the company.
It's a wonderful product.
With the exception that it doesn't carry Rush.
Pierce Roberts Jr. is nothing more than a disgruntled nay-sayer spouting about sour grapes on the way out the door. Now that his anchor has been lifted from XM's neck, things will be all blue skies from here on out.
The masses will be lining up to hear Howard Stern's next round of penis jokes and Orca Windbag's cookie recipes. Or possibly even Orca's latest penis jokes.
Owl_Eagle(If what I just wrote makes you sad or angry,
Satellite radio is a good idea, it costs too friggin' much to be worth buying for too large a section of this country. I COULD afford it, but I get radio for free....why give XM or anyone else my money?
"If its '80s and I've never heard of it, it didn't get played at all during that time or its bad."
I've noticed that as well on the '80s Channel. I do like some other channels that XM offers, though. Still, we'll see how this comes out.
I'll wait a few more years before I jump on the pay-for-radio bandwagon. I'll wait to see how all this settles out. No matter which one I subscribe to, it would be the one that failed.
XM's programming has always been mediocre at best... their in house talk radio sucks real bad... Also XM is losing customers to sirius fairly quickly.
If XM would sign Rush to a long-term contract, they'd probably increase their subscriber base by 20% overnight.
both satellite companies will eventually fail. people arent gonna pay for something they can get for free. paying stern $500 million is completely insane. if thats what it takes to get a "notable" personality on air, then they are in deep trouble. ill be shocked if they ever turn a profit with the debt theyre stacking up.
plus $13 a month adds up for a consumer. if the economy dips in the next few years, this is the first thing people will drop.
"I COULD afford it, but I get radio for free....why give XM or anyone else my money?"
It's becoming the same deal as cable vs. broadcast TV. Regardless where I am in the country, I can get the same stations. Some are more "adult", like some talk or comedy stations, and you aren't going to get that on radio broadcast.
I hate rap and the other crap that passes for music. Before XM came along, the last time I listened to the radio Pearl Jam was a new group.
The problem is the start up costs for these companies (building and launching satellites) and then maintaining the system. Then selling the service at a loss, hoping that overtime, you'll get more subscribers and turn a profit. In the meantime, you keep diluting the stock pool to keep the business alive.
Its a high risk business model that almost always fails.
It reminds me of all those dot com business plans I saw in the 90s.
HD FM radio is on the horizon within the next couple years. When it rolls out, satellite radio is dead meat.
I'm having similar results with the 70's station. I've only had XM for a couple of months and IMO the 70's station has a poor selection of music for that timeperiod - way too much disco. Some of the deep tracks stations can be good at times, but I find myself flipping channels too much. On a good note, though at least I can hear Fox News while I'm on the road, and it has some other good talk stations.
How often does one listen to music? Continuously? I mean, the only time I listen to the radio is when I'm driving in my car. Besides, I already have all the music I want burned to CDs. I'm not going to pay $13 and buy a receiver when I only listen to the radio maybe 8 hours each month.
Learned from 8-tracks, Beta-Max, Video LPs, and Digital Tape, eh?.........
"The masses will be lining up to hear Howard Stern's next round of penis jokes "
In our busy ever changing world, Howard Stern can be counted on to repeat the same show over and over,day after day, year after year, after year, after year, after year.
My AM/FM tuner hasn't been used since I got Sirius.
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