WASHINGTON — XM Satellite Radio said it now expects to add 500,000 fewer new subscribers in 2006 than originally anticipated.
The U.S. satellite radio company is now projecting that it will end 2006 with 8.5 million subscribers, instead of 9 million, "resulting in subscriber revenues of $835 million and EBITDA loss… of $235 million," said a press release on Wednesday.
XM reaffirmed that it remains on track to have positive cash flow from operations for the fourth quarter of 2006 and on an annual basis for 2007.
"Subscriber growth for the first quarter of 2006 was consistent with our initial guidance of nine million subscribers by the end of 2006," said Hugh Panero, president and CEO of XM Satellite Radio. "Although XM has regained retail market share since the first of the year, the satellite radio category has seen an overall softness at retail during the second quarter to date, and we have been later than anticipated with broad availability of our new products."
The revised guidance of 8.5 million subscribers still represents growth of more than 40% over the course of the year, the company pointed out. XM expects to add a total of more than 2.5 million net new subscribers this year. It ended 2005 with 5,932,957 subscribers and the company added more than 568,000 net new subscribers during the first quarter of 2006 for a total of more than 6.5 million subscribers.
The company also cautioned that it is currently working through regulatory and legal challenges, the resolution of which could affect future product availability and operating results, and require us to review this revised guidance.
XM shares dropped US$1.14 – about 7.3% – to $14.37 on Wednesday afternoon while competitor Sirius Satellite Radio shares fell 4% to US$3.74.
Right after XM put out its release, Sirius issued its own, confirming previous subscriber guidance of more than 6.2 million subscribers by year-end 2006, representing an 87% increase over the company’s subscriber base at the end of 2005. The company continues to expect to add more than 2.8 million net subscribers during the year.
"We continue to experience dramatic growth and strong demand for our service across our retail and automotive OEM channels," said Mel Karmazin, CEO. "This supports our expectation that we will capture the majority of retail satellite radio net additions in 2006."
Publicly traded XM Canada did not issue a release in response and its guidance likely remains unchanged (it says it’ll hit 75,000 in advance of its year-end, August 31st) as satellite radio is a far newer service in Canada. Sirius Canada is a private company and recently reported it has surpassed the 100,000 customer mark.
