Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Monday, November 06, 2006

XM, Put The Cork Back In The Champagne

XM Satellite Radio announce improved revenue and a smaller loss for the third quarter. Revenue rose 57% from the same quarter last year to $240 million. The company's operating loss narrowed from $110 million to $61 million.

Close, but no cigar.

XM still has $1.3 billion in long-term debt net of the current portion and total liabilities of $2.3 billion. And, the company only added a total of 282,000 net subscriptions during the period taking the total to 7.185 million. Profections by the company indicate that they may only hit 7.7 million subscribers by year-end. That means over the critical holiday season, net new subs may only total 500,000.

Taking away from the revenue improvement further, subscription acquisition costs rose to $60 per unit from $53 last year, and "cost of gross acquistion" rose to $93 from $89.

In sum, XM is a business with slowing growth and higher costs per customer acquired.

XM's stock jumped 16% on the news to $13.20, but still down from its 52-week high of $32. It took rival Sirius's stock up as well. With numbers like these, it should not go much higher.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger