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XM Eyes 2M Subs By Next Quarter

Washington – XM announced today that it expects to have 2 million subscribers by the end of June, only seven months after hitting the 1 million mark.

In addition, the company announced that in a first-quarter earnings conference that it expects to exceed Wall Street expectations of 2.8 million subscribers by the end of the year.

Although generally mum on the topic of new products, president and CEO Hugh Panero did say that products with third-generation chipsets will be available to retailers this summer. These will allow built-in wireless FM transmitters and the ability to stream personalized stock quotes.

Panero said XM subscription levels through Best Buy increased by 50 percent year-over-year and that XM was responsible for 70 percent of the new subscriptions in satellite radio generated at retail overall. Including OEM, XM has an 83 percent share of subscribers, said the company.

On the OEM front, XM said that as of late September all XM-enabled radios in new vehicles from General Motors and Honda will be pre-activated, creating more demo vehicles on the car lot.

“Under the old program, a number of GM vehicles would be equipped with XM and shipped to the dealers and then if the dealer didn’t follow the manual process, they may not activate all those vehicles.” Panero explained.

GM and Honda combined are manufacturing over 1 million XM-equipped vehicles, and that is expected to increase to 1.5 million in the 2005 model year. With the new addition of Saab, XM is available on every nameplate manufactured under the GM umbrella, said the company.

Approximately 52 percent of XM subscribers are obtained through retail.

XM also announced it spent $15 million on advertising in the first quarter and it just launched a network and TV campaign in time for the “Dads and Grads” selling season.

Other facts noted by XM:

XM posted its financial report.

Over 80 percent of XM subscribers are paying customers (vs. those on a promotion) and this figure is expected to grow to 90 percent by the end of the year.

Currently, 144,162 subscribers are on the family plan, or 8.6 percent of subscribers. Multi-year subscribers represent 11 percent of the subscriber base, paying on an average 6.2 months in advance.

XM’s churn rate for the quarter improved to 1.3 percent.