Sanguine XM cuts Q4 loss

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Executives at XM Satellite Radio on Thursday reported a narrower loss than last year, said a wobbly U.S. economy hasn't hurt their business and that they expect to merge with Sirius Satellite Radio soon.

Chairman Gary Parsons said he expects a "timely and positive" resolution to the yearlong effort XM and Sirius have engaged in while trying to persuade regulators that they should be allowed to merge.

He told analysts during a conference call that he and Sirius CEO Mel Karmazin are aware of Saturday's merger termination deadline but that he expects to announce before then that the deadline has been extended without alterations to the financial conditions of the merger.

He said that despite a weak economy, churn and the conversion rate from free trials to paying customers are "rock solid," as is average revenue per user.

XM reported 1.1 million gross subscriber additions during the fourth quarter and 460,000 after accounting for those who canceled the service. The net additions left XM with 9 million subscribers, more than the 8.3 million Sirius reported this week.

For the fourth quarter, the company lost $239 million, an improvement compared with the $257 million it lost a year ago. Revenue rose 20% to $308 million.

While the results beat the expectations of Wall Street analysts, shares of XM fell Thursday, perhaps a function of investors' impatience about the pending merger.

"XM stock will continue to be merger-driven," Miller Tabak analyst David Joyce said, reiterating his "buy" recommendation and $17 price target. Shares of XM closed down 3% on Thursday to $12.11.
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