Sirius Q1 loss shrinks from year ago

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Although Sirius Satellite Radio dramatically narrowed its first-quarter loss by increasing its subscriber ranks, few on Wall Street seemed impressed Tuesday, and the stock sank 3%.

Sirius added 988,000 gross subscribers, or 556,490 net subs to end the quarter with 6.6 million, more than many analysts predicted and up from 4.1 million a year ago.

The company lost $144.7 million, down from a loss of $458.5 million in the same quarter last year on revenue that surged 61% to $204 million.

Bank of America analyst Jonathan Jacoby, while acknowledging that Sirius added more subscribers than he had projected it would, nevertheless discounted the company's achievement.

"Since Sirius counts subscribers at the time of vehicle production rather than the time of sale, this suggests the biggest boost to the sub base in the first quarter has come from 'car-lot' subs," he said.

He also panned Sirius for not raising its year-end subs guidance of 8 million.

Sirius is trying to combine with XM Satellite Radio. When the agreement was announced, it was to be a merger of equals worth about $13 billion.

But investors and analysts have significant doubts the FCC and the Justice Department will give permission for the two to merge, and the stocks of both companies have sunk accordingly, so that now the deal is valued closer to $10 billion, Goldman Sachs analyst Mark Wienkes said.

Sirius CEO Mel Karmazin has been lobbying lawmakers for weeks, trying to sway their opinion in favor of a combined XM-Sirius, and he told analysts Tuesday he expects his efforts will lead to success.

"We remain confident that the regulatory authorities will weigh the merits of the transaction, and that we will be able to close the transaction by the end of the year," Karmazin said.

Shares of Sirius fell 9 cents to $2.87 Tuesday, while XM shares fell 26 cents to $11.44.
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