Sirius ahead of XM growth curve

Satellite radio firms tell different subscriber tales

NEW YORK -- Shares of the two big satellite radio companies were under pressure Wednesday as both updated their third-quarter subscriber gains and reiterated their full-year user growth guidance.

XM Satellite Radio said it added more than 285,000 net new subscribers during the latest quarter, bringing its total customer base to more than 7.2 million. Bear Stearns analyst Robert Peck said the third-quarter user figures for XM were "marginally lower" than his estimate of 325,000, which he recently raised from a lower original projection.

XM said it continues to expect to end the year with 7.7 million-8.2 million subscribers. That has been the firm's projection since a couple of guidance reductions from the original target of 9 million-plus users by year's end.

Meanwhile, competitor Sirius Satellite Radio said it added more than 441,000 net subscribers in the third quarter to end it with more than 5.1 million customers. That was more than twice the 2.2 million subscribers that Sirius recorded as of the end of third-quarter 2005.

Peck said the figures were "marginally ahead" of his expectation of 425,000 subscriber adds.

Sirius also said Wednesday that it again outperformed XM in user gains in the latest period, with 61% of total net satellite radio user additions. This marked the fourth consecutive quarter that Sirius has beaten XM in terms of subscriber growth. Analysts have pointed to XM product delays and Sirius' addition of Howard Stern this year as key drivers of Sirius' outperformance.

Based on the latets quarterly figures, the company Wednesday reiterated its projection that it will end the year with 6.3 million subscribers.

XM shares closed down 4.9% at $11.96, giving it a market capitalization of $3.2 billion, according to Yahoo! Finance. Sirius shares finished the day at $3.94, down 3.2%. That meant a market capitalization of $5.5 billion.

Both stocks remain closer to their 52-week lows as Sirius has traded at $3.60-$7.98 during the past year, and XM has been trading at $9.63-$36.91 for the same period.

XM said Wednesday that starting with the just-ended third quarter, it no longer includes certain rental car fleets in its subscriber total, which cut about 20,000 customers. The change is part of a new marketing program that XM recently implemented with certain rental fleet partners for 2007 model year vehicles.
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