Jasper
2-16-06, 04:33 PM
NEW YORK (Reuters) - XM Satellite Radio Holdings Inc. (Nasdaq:XMSR - news) on Thursday posted a wider fourth-quarter loss, hurt by higher programing and marketing costs even as revenue more than doubled.
In addition, XM said that a company director, Pierce Roberts, has resigned from the board because he saw "a significant chance of a crisis on the horizon" and was "troubled" about XM's direction.
XM disclosed Roberts' resignation in a filing with the
Securities and Exchange Commission, and said Roberts favored cutting spending to boost cash flow.
Shares of XM, which has almost twice as many subscribers as smaller rival Sirius Satellite Radio Inc. (Nasdaq:SIRI - news), fell 7.7 percent to $23.30 in premarket trade on the Inet electronic network.
XM, which last week signed Oprah Winfrey to program her own channel for XM Satellite Radio under a three-year, $55 million deal, said its cost of attracting additional subscribers rose by 39 percent in the fourth quarter. Revenue more than doubled and topped Wall Street expectations.
The Washington-based company posted a quarterly loss of $268.3 million, or $1.22 a share, compared with a loss of $188.2 million, or 93 cents per share, a year earlier.
Analyst had expected a loss of 92 cents a share, according to Reuters Estimates.
Revenue rose to $177.1 million, from $83.1 million. Wall Street, on average, had expected revenue of $174 million.
XM Satellite said it added over 898,000 subscribers in the quarter and now has more than 6 million, and is on track to reach 20 million by 2010.
Both XM and Sirius are growing rapidly in a nascent market, but losing money as they spend heavily on technology and entertainment such as celebrity hosts to win new subscribers. The companies aim to attract long-term users who will pay a monthly fee for years to come.
XM's signing of Oprah came on the heels of Sirius's January launch of a new show by raunchy radio jock Howard Stern under a five-year deal that will pay Stern about $500 million.
XM said its subscriber acquisition cost rose to $89 in the quarter, compared with $64 one year ago.
"These increases were primarily due to higher marketing expenses to meet a one-time competitive event in the fourth quarter," XM Chief Executive Hugh Panero said in a statement.
Panero did not mention Howard Stern directly, but analysts had anticipated that XM would have to work hard to match Sirius' marketing push leading up to Stern's January debut.
He said XM expects a more routine market environment in the first quarter, now that the run-up to Stern's launch has ended, and projected subscriber acquisition costs will decrease in 2006. Overall, the company sees subscription revenue of $860 million for the full year, up from $503 million in 2005.
XM shares have fallen 19 percent since it reported third-quarter results in October. Over the same period Sirius shares are nearly flat.
Sirius is expected to report its quarterly results on Friday.
In addition, XM said that a company director, Pierce Roberts, has resigned from the board because he saw "a significant chance of a crisis on the horizon" and was "troubled" about XM's direction.
XM disclosed Roberts' resignation in a filing with the
Securities and Exchange Commission, and said Roberts favored cutting spending to boost cash flow.
Shares of XM, which has almost twice as many subscribers as smaller rival Sirius Satellite Radio Inc. (Nasdaq:SIRI - news), fell 7.7 percent to $23.30 in premarket trade on the Inet electronic network.
XM, which last week signed Oprah Winfrey to program her own channel for XM Satellite Radio under a three-year, $55 million deal, said its cost of attracting additional subscribers rose by 39 percent in the fourth quarter. Revenue more than doubled and topped Wall Street expectations.
The Washington-based company posted a quarterly loss of $268.3 million, or $1.22 a share, compared with a loss of $188.2 million, or 93 cents per share, a year earlier.
Analyst had expected a loss of 92 cents a share, according to Reuters Estimates.
Revenue rose to $177.1 million, from $83.1 million. Wall Street, on average, had expected revenue of $174 million.
XM Satellite said it added over 898,000 subscribers in the quarter and now has more than 6 million, and is on track to reach 20 million by 2010.
Both XM and Sirius are growing rapidly in a nascent market, but losing money as they spend heavily on technology and entertainment such as celebrity hosts to win new subscribers. The companies aim to attract long-term users who will pay a monthly fee for years to come.
XM's signing of Oprah came on the heels of Sirius's January launch of a new show by raunchy radio jock Howard Stern under a five-year deal that will pay Stern about $500 million.
XM said its subscriber acquisition cost rose to $89 in the quarter, compared with $64 one year ago.
"These increases were primarily due to higher marketing expenses to meet a one-time competitive event in the fourth quarter," XM Chief Executive Hugh Panero said in a statement.
Panero did not mention Howard Stern directly, but analysts had anticipated that XM would have to work hard to match Sirius' marketing push leading up to Stern's January debut.
He said XM expects a more routine market environment in the first quarter, now that the run-up to Stern's launch has ended, and projected subscriber acquisition costs will decrease in 2006. Overall, the company sees subscription revenue of $860 million for the full year, up from $503 million in 2005.
XM shares have fallen 19 percent since it reported third-quarter results in October. Over the same period Sirius shares are nearly flat.
Sirius is expected to report its quarterly results on Friday.