XM Stops Sales of Select Receivers

By Ed Oswald | Published May 31, 2006, 11:42 AM

XM Satellite Radio disclosed late Tuesday in a filing with the Securities and Exchange Commission that it was suspending the sale of two of its radios, while reviewing others. The move comes as a result of a FCC notice that the units were not in compliance with signal strength laws.

The leading satellite radio provider first disclosed that it was under investigation for signal strength issues in its Delphi SkyFi2 receiver in late April. At the time, the FM transmitter in the device was said to operate outside of transmission limits.

In early May, Audiovox disclosed that the company was conducting a review on one of its receivers for a similar problem. According to the filing, it now appears that XM has decided to halt sales of both devices. However, it appears that no recall is likely at this time.

The issues do not pose a safety risk, and the FCC has provided clarification on the transmission limits to the company, XM said in the filing. While it expected some interruption in radio availability, it was working with manufacturers to limit any issues.

XM recently lowered its year-end subscriber growth target from 9 million to 8.5 million, and said it would stand by that number. However, it could not provide any assurances that the issues would not affect the company either financially or through its operating results.

For investors and fans of XM, it has seemed like a tidal wave of bad news for the company. Although it still leads Sirius by a 3 to 2 margin, the smaller of the two satellite radio providers has been red hot as of late, adding more customers last quarter and scoring about a 60 percent share at retail.

The Federal Trade Commission is also investigating XM over its billing and rebate activities, and investors have questioned its relationship with General Motors as well as its subscriber acquisition costs.

To combat the issues, XM will attempt to gain FCC authorizations for new radios, and rush modified radio results to the regulator to speed the process of rebuilding its retail presence.

Meanwhile, Sirius recently upped its end of year guidance to 6.2 million, and the company appeared optimistic that it would be able to easily exceed that number.

Comments

View comments by with a score of at least

What is the reason that the Delphi SkyFi2 is operating 'outside of transmission limits'? Does this mean it is stronger than it is suppose to be??? If so ill take 10

Score: 0

|

I think both companies will have their ups and downs for a while, the market is too new for either of them to be able dominate for long.

Score: 0

|

Howard Stern must be laughing his a$$ off:-)

Score: 0

|

Hell yea. With his sign-on bonus, that's more than enough for him to retired 10 times over.

Score: 0

|

It's a lot harder to fly under the radar when your at the top.

Score: 0

|

It's the US vs. the EU over Oracle+Sun and the meaning of 'open source'

Now that the EU is a virtual country, the US Justice Dept. is taking a stand in favor of its view -- and against the EC's -- that MySQL will survive under Oracle.

Qualcomm: $1.3 billion Samsung licensing deal unrelated to fair trade violations

Samsung has come to a 15-year licensing deal with Qualcomm over 3G and 4G wireless technology.

Firefox turns five: Thanks for giving us a choice

Carmi Levy | Wide Angle Zoom: No longer the phoenix rising from the ashes, Mozilla has carried on more than just Netscape's legacy.

If Microsoft sites lead time online, pigs can fly

How can people spend more time at Microsoft sites, when the measure of success is Windows Live Messenger, which sits on the desktop?

Snow Leopard and Windows 7 still can't crack the netbook problem

Apple has killed Atom support in OS X 10.6.2 and Windows 7 Starter Edition is stripped of "basic" functionality.

Microsoft's Top 3 advances in Exchange Server 2010

The latest round of changes launched today will impact how admins deliver services to e-mail recipients, and how much companies will pay along the way.

Nokia's 'limited number' of recalled chargers exceeds 14 million

Today, the Finnish phone maker has begun a recall of mobile phone chargers that are a shock hazard.

Ubuntu 9.10 upgraders report frustration

For those Wine aficionados out there, beware of the remote possibility that your Linux system could be infected by Windows-seeking malware.

Supreme Court considers patentability of abstract methods today

Can software that executes a formula for a business process qualify for federal patents? An appeals court already said no, and inventors are making their case.

Thanks, iPhone: Google buys mobile advertiser AdMob for $750 million

AdMob came to thrive thanks to the iPhone's popularity, now Google has bought it.

Exchange Server 2010 goes live, will extend rights-managed e-mail to browsers

A new feature will give companies a way to prevent users from manipulating e-mail content they receive based on what the messages contain.