RSSXM 'Cash Flow Positive,' But Struggling
By Ed Oswald | Published January 5, 2007, 2:08 PM
Even though XM Satellite Radio has achieved a positive cash flow, lagging subscriber growth to competitor Sirius is problematic. However, the news of both services moving ever so slowly towards profitability made Wall Street happy.
Once far outpacing its smaller rival in subscriber growth, XM now finds itself being outpaced by Sirius by over a 2 to 1 margin. For the crucial fourth quarter, the company added about 442,000 new subscribers, compared with 905,000 for Sirius.
During the year, XM lowered subscriber guidance twice, from 9 million initially to 7.7 to 7.9 million late in the year. But the company missed even its lowest target by a small margin, ending the year with 7.625 million subscribers.
XM CEO Hugh Panero attempted to put a positive spin on the disappointing numbers. "XM completed another year of significant subscriber growth, despite retail softness, and did so with continued cost controls, achieving positive cash flow from operations during the fourth quarter," he said.
Sirius also missed its expected target of 6.3 million, it should be noted, although it had also reduced its target to between 5.9 and 6.1 million late in the year. The company ended the year with just over 6 million subscribers.
In any case, achieving positive cash flow is important. By becoming 'cash flow positive,' a company is able to pursue more opportunities to increase shareholder value and is healthier overall. In the short term, at least.
Financial analysts indicated that a miss for XM was likely already priced into the stock due to indications that sales remained weak during December at retail. Others said the numbers could bolster the idea of a merger between the two companies, and for "significant change" in the industry.
In midday trading, XM was up 28 cents to $15.26, but not after beginning the trading session down sharply on the news. Sirius was up four cents to $3.81.
Merge? Not likely. As a consumer I would hate to see that- $18 per month service would be right around the corner.
I like Sirius, not XM as a listener. Apparently so so others by about a 2:1 margin. So why should Sirius buy XM? I am sick of the Wall St. buzz about merging.
If the market gets anywhere near projections for cars, truckers, boats, Canadians, etc., and ad sales ramp accordingly, both companies will be Very Profitable. It will take a while for WiMax etc. to compete- I'll take a sleek pulg and play unit over some laptop rig any time, and I need access to live info such as cnbc and cnn and bbc world news. Cnbc for exampleis more expensive if you sign up for their new streaming service.
Sorry but a podcast doesn't cut it with live global news. Internet wont be there for a few years. Satellite radio just got too doubted in 2006.
The way it is now, with Sirius and my iPod in the car, I am happy for years to come.
oh hd radio? I will not pay $200 for a unit to listen to ads with my music! And less variety? Forget HD radio, satellite is here to stay.
They said people would never pay for tv either... but XM is the slow mover now- one day SIRI will be the larger of the two.
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|Sirius is much better and 100% commercial free music unlike XM.
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|I don't exactly subscribe to XM but I do get alot of it's content for free. AOL Provides all it's members and non-members a wealth of channels to listen freely. Plus you will also find these options on AIM, and WINAMP. Technically if one wanted to listen to XM for free in the car all you need is a wi-fi enabled laptop and an FM transmitter to broadcast to the car. I'm happy to see America Online listened to my idea adding XM content to the network before they phased out my call center in Maitland, FL. In return paid subscribers can listen to AOL Radio stations including sessions and AOL Live aka: Concerts.
So if your cashflow is low but want to listen here is what you do.
www.aol.com offers free service to anyone with a high speed service to all it's service at 0 costs to you. This provides 200 + stations.
www.aim.com = embeded aol radio featuring XM
www.winamp.com = AOL Radio featuring XM and Shoutcast (pluggins with versions 5.2 included)
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|I just dumped Sirius. Too many channels getting dumped and dumb content being added, like NASCAR. It's bad enough watching cars go round and round, now I should listen!? I get plenty of the content I want with podcasts and it costs me nothing.
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|These companies waste so much money paying idiots to be DJ's for each channel, mouthing off in between songs. They use has beens from the old MTV days, they should fire all these morons and just play one song after the other.
XM is owned by GM, probably the crappiest car builder on Earth. They figured we'll force it on our customers by making all radios XM ready. You get that lovely flat black antenna on your roof, and if you have OnStar, you get a second, uglier antenna right next to the the other one.
This plan didn't work so well and neither company is truly profitable.
Every time something new comes out, there's a stupid war of two competing companies and nobody really wins. Just like HD-DVD and Blu-Ray.
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|XM owns, I own it.... love it..
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|Go back and read the betanews reports on these services a year ago and I said then they would eventually merge. They'll save money and make new money at the same time by doing so. Still, I'd never pay for this junk, since they insert ads everywhere now.
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|I subscribed thinking there were no adds. After all that's the way it was advertised/implied. But, as you said, the adds are there...it just ticks me off every time I hear one. I listen to the comedy channel alot. There are lots of commercials on that channel - AND the commercials are amature. They are the worst commercials I've ever heard.
Other than the commercials, I really like XM radio. I have a family subscription with three receivers.
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|screw hd-fm. If it's going to be run by companies like clear channel and cbs radio/infinity radio, it still won't be worth listening to. Look how well the free fm thing worked in chicago. Just a huge disaster.
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|I'd rather see HD-FM get its act together and come standard in all vehicles. Then we'll see both of these companies scrambling for their lives.
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|You are aware that the reason why there are no commercials on HD-FM is because its still is considered an experimental license by the FCC, and therefore unlawful to attempt to make money with. Once its made official expect the ads to come with it.
You pay for radio. Period, either by the ads or by a monthly fee.
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|I find XM Radio's programming to be far more enjoyable compared to Sirius, but I suppose it's a matter of personal choice. Both attempt to reach out to various musical niches. XM Radio just does a better job for the buck IMO.
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|It would be interesting to know who is giving away more subscriptions and what that translates into at the end of the free trial.
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|Merge already... Sirius is better in content, lack of ads, and personalities. Go by Sirius headquarters, and beg for jobs, XM.
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|Is it true that the quality of most of the stations on Sirius were downgraded in order to give the Howard stations the best quality? If so, I would go with XM because I want high quality music, not high quality voice.
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