WASHINGTON and NEW YORK – Big, long-term investments are not for the faint of heart.
XM Radio and SIRIUS Satellite Radio both reported their year-end results for 2005 this week. The final tally for losses? US$1.53 billion, $863 million for Sirius and $666.7 million for XM (all funds in U.S. dollars).
Does this mean the two firms are spiraling out of control spendthrifts? Probably not, although one XM board member, Pierce Roberts, quit this week amid his escalating concerns over the company’s rapid growth plans, said several U.S. reports.
As long as the two companies keep growing (and their Canadian partners, Sirius Canada and XM Canada will help there), the losses – huge as they are – will fade. At Sirius, subscribers increased by 190% to over 3.3 million as of December 31st. Revenue Grew 262% to over $242 million for the year and the company says it will have more than six million by December 31st of this year.
Plus, subscriber acquisition costs are going down and were $113 for the fourth quarter and $139 for full-year 2005 – a 21% improvement over the full-year 2004 level, said the company.
At XM, the company added 2.7 million net subscribers in 2005, bringing its total to over six million already. Company president and CEO Hugh Panero said XM will have over nine million subscribers by year-end, subscription revenue will reach $860 million in 2006 and expects to achieve positive cash flow from operations by the end of this year.
XM added 898,315 in the fourth quarter of 2005 alone. Later than expected activations from strong holiday sales brought the total to more than six million during the first week of January.
