XM Satellite Radio Loss Hits $122 Million

TxDoc · July 25, 2002

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By Renae Merle

Washington Post Staff Writer

Wednesday, July 24, 2002; Page E05

XM Satellite Radio Inc. yesterday reported increasing losses during its second quarter even as it reached 136,718 subscribers, passing its goal for the period.

During the quarter that ended in June, XM reported a loss of $122 million ($1.38 per share), up from $44 million (76 cents) during the same period a year ago. The loss was higher than analysts' expectations of $1.29 per share, according to a survey by First Call/Thomson Financial.

That helped spur a Wall Street sell-off and the company's stock lost $1.25, closing at $4 yesterday, a 52-week low.

XM reported revenue of $3.8 million for the quarter. It had no revenue during the year-ago period because it hadn't launched its service yet.

"We're pretty pleased" with the earnings report, said Hugh Panero, chairman and chief executive. "We are in a difficult market and we continue to show that we're a product in demand."

D.C.-based XM and its New York-based competitor, Sirius Satellite Radio Inc., have taken on the tricky task of luring radio listeners to a national alternative that beams 100 channels from satellites to anywhere in the country for $10 to $13 a month. XM began signing up subscribers in late September and launched nationally in November; Sirius launched its service in late winter.

XM announced yesterday that in September it would begin offering its first premium channel, Playboy Radio, for an additional $2.99 a month. It also said it would roll out the second generation of its technology, with cheaper chipsets, by the end of the year.

The higher losses were expected as XM made the transition from developing technology to offering service. During the quarter, the cost of customer care and billing operations shot up to $3.9 million, from $1.6 million. But the firm's sales and marketing budget saw the biggest jump, hitting $46.8 million during the quarter, from $7.3 million.

It's expected to be at least three years before XM makes a profit, but the company said it has enough cash on hand to fund its operations into the first quarter of 2003.

Given the current market, it could be difficult for XM to raise more money through a secondary stock offering, said William Kidd, an analyst with investment banking firm Lehman Brothers. He said it could be forced to raise cash from new strategic partners or its current partners, which include radio giant Clear Channel Communications Inc.

"I think it's the number one concern," said Kidd. "I don't think satellite radio is a number one priority among the investment community right now."

A key part of XM's strategy for profitability is having the radios installed in new cars. A customer is more likely to absorb the cost of a satellite radio, which can run more than $300, when already spending $20,000 for a new car, the theory goes. General Motors Corp. has announced that the radios would be available in 25 of its models.

"We are now switching gears to the General Motors launch, which is like the second launch of the company," Panero said.

XM also reaffirmed its forecast of 200,000 subscribers by the end of the current quarter and 350,000 by year's end.

TxDoc · July 25, 2002

Just to add-I am not putting down XM. In fact, I am ordering it. That info was passed to me by my brother and I just posted it for the information value and not to judge the company or the service.

Firetiger(MN) · July 25, 2002

Playboy Radio?? What good is it on radio? :music:

rrsob · July 25, 2002

Maybe.....

"Well I'm wearing a pink teaddy....with a fuzzy colar and

a whole bunch of sequins...........................................

..........and I love cool summer nights and Sly Stalone movies

......and ponies. Now back to Chrissy and the News."

:ehh: :ehh: :lookaround:

MarkD · July 25, 2002

Maybe.....
"Well I'm wearing a pink teaddy....with a fuzzy colar and

a whole bunch of sequins...........................................

..........and I love cool summer nights and Sly Stalone movies

......and ponies. Now back to Chrissy and the News."

Maybe if they had a call in show...J/K :baa: