XM Exceeds Forecasts

WASHINGTON— XM Satellite Radio announced it expects to gain 300,000 new subscribers in the fourth quarter, exceeding its original guidance of 1.2 million subscribers by the end of the year.

In addition, president and CEO Hugh Panero said at an analyst's conference that XM expects to overshoot analysts' predictions for its 2004 subscriber level of 2.5 million.

Panero says XM represents 85 percent of the satellite radio market, adding, "We now have the wind at our backs. We have all the characteristics of a mass-market phenomenon."

XM added 237,395 subscribers in the third quarter, ending Sept. 30, for a total of 929,648 subscribers.

On the retail front, XM said Wal-Mart is ramping up its selection and should become a bigger factor in future sales. Target is also performing a test market on XM products, said XM.

Sales of the new universal tuner/FM modulator, the XM Commander, are limited at present, although the company said production is ramping up. XM said 18,000 XM Commanders have been produced to date, along with 100,000 new Delphi XM Roadies.

Panero said XM is working with Satellite Radio Direct, Syracuse, N.Y., to package its new XM Direct tuner/antenna kit with cables for various aftermarket and OEM applications. A cable for BMW radios is already available from Blitz Safe, with an Alpine cable expected in January. Cables for several other brands are expected to be announced at CES, Dan Murphy, retail marketing and distribution senior VP, said.

On the new car front, OEM XM sales accounted for more than half the new subscriber additions for the third quarter, with the same split forecast for the fourth quarter, said Panero. General Motors and Honda are expected to manufacture a combined one million XM factory-equipped vehicles in the 2004 model year, with 200,000 of those from Honda. GM expects to account for a total of 400,000 subscribers by the end of 2003, and should reach 1 million subscribers by the end of the first quarter next year, said XM.