XM Cut Net Subs; Net Loss Narrows
By Amy Gilroy -- TWICE, 8/6/2007
WASHINGTON — XM Satellite Radio reported a narrower net loss and higher revenue for the second quarter, citing record gains in automotive subscribers.
XM's loss narrowed to $176 million, representing a 23 percent improvement compared with the period a year ago. Revenue increased 22 percent to $277 million, compared with $228 million for the same period in 2006.
Net subscriber additions fell for the quarter, ended June 30, compared with last year but gross additions increased.
XM ended the quarter with more than 8.25 million subscribers, reporting gross subscriber additions of 942,000 and net subscriber additions of 338,000, compared with 926,000 gross additions and 398,000 net additions for the period last year.
Automotive subscribers accounted for 618,000 of XM's gross additions for the quarter.
Also, the total number of vehicles produced with factory installed XM radios surpassed 8 million during the period, including 5.5 million General Motors vehicles.
Subscriber acquisition costs increased to $75 compared with $67 in the second quarter last year. The current SAC included $10 for inventory related charges as well as a $10 increase as a result of continued OEM growth from increased production by newer auto partners.
Also for the quarter, adjusted operating loss (formerly adjusted EBITDA) was $47 million compared with a loss of $46 million last year. This includes $4 million in expenses related to the pending merger with Sirius Satellite Radio.
Hugh Panero, who recently announced he will leave XM this month after a decade with the company, said in a prepared statement, "XM will be in great hands with Nate Davis as president and interim CEO. Nate has been an outstanding addition to the senior management team and I am confident he will carry XM to the next level of success."
Regarding the pending merger with Sirius, XM noted that during the recently completed 45-day initial public comment period of the Federal Communications Commission (FCC), more than 4,000 comments were filed with the FCC in favor of the merger. It claimed, "The volume, diversity and strength of the public comments filed with the FCC during this period demonstrated persuasively that the merger is in the public interest and should be approved."
