Satellite Radio - Losses & Gains

Satellite radio continues to surge in popularity, but competitors XM and Sirius both posted losses for the third fiscal quarter, ended September 30.

On Thursday, November 4, XM Satellite Radio reported a third-quarter loss of $118 million—less than analysts had predicted, and a better performance than the $133 million lost in the same period in 2003. Quarterly revenue was $65.4 million, aided by the addition of more than 415,000 new subscribers. The revenue total was more than twice the $27 million posted a year earlier. XM's subscriber base is now above 2.5 million and should reach 3 million by the end of the year at the current growth rate.

The day before XM released its figures, Sirius Satellite Radio reported a third-quarter loss of $169 million, not an improvement compared to the $106.7 million loss posted for the same period one year ago. Sirius added 182,000 new subscribers during the quarter, at an acquisition cost of $239 per subscriber. XM claims new subscriber acquisition costs of only $89. Sirius hopes to have more than one million subscribers by the end of the year.

Both services continue to roll out new products, find new distribution channels for them, and sign deals with automakers to include satellite radio receivers in new vehicles. XM recently announced the availability of its new Delphi XM MyFi, a portable receiver built along the iPod's lines and perceived by some analysts as a potential competitor for Apple Computer's most popular product.

Retailing for $349.99, plus a $9.95 monthly subscription fee, the XM MyFi includes antennas and adapter kits for home and car use, plus headphones, belt clip, remote control, and rechargeable batteries. Of particular interest is its ability to capture and play back up to five hours of XM content without connection to a computer or songlist management software. MyFi's wireless FM transmitter makes it easy to use in automobiles.

On October 26, Sirius announced that Office Depot stores would begin carrying a Sirius-compatible satellite receiver similar to the XM MyFi, the $149 Xact XTR1 "Stream Jockey." The deal instantly added 900 retail locations to Sirius' growing roster of dealers. Office Depot is one of the fastest-growing operations in the US, with 80 new locations scheduled to be opened in 2004 and 100 more in 2005. On October 26, Sirius also announced expanded partnerships with automakers BMW, Volvo, and Mercedes-Benz. Beginning in the summer of 2005, Sirius receivers will be available as factory-installed options in BMW 3 series models for a $595 charge. By January 2005, similar hardware should be available in four new Volvo models: the S80, S60, V70, and XC0. Sirius receivers are available as dealer-installed options for $679 (plus installation) for 10 models of Mercedes-Benz. The latest Mercedes to receive the Sirius treatment is the 2005 SLK350 Roadster.

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