Wall Street OK with radio satcaster's numbers
XM Satellite Radio has signed up 30,000 people for its subscription radio service since its November launch, and expects to have about 350,000 subscribers by the end of 2002, the company said in its year-end earnings announcement Thursday.But the effort to recruit subscribers came at a heavy cost, as the fledgling radio satcaster’s losses ballooned more than five-fold to $284 million last year, on revenues of just $533,000. XM’s subscriber forecast was near the low end of analysts’ estimates, which ranged between 300,000 and 450,000. Still, Wall Street seemed comfortable with the company’s numbers Thursday, bidding the stock up by nearly 6% to $14.95. Bear Stearns analyst Robert Peck said investors were relieved that the subscriber numbers didn’t come in below that band. Wall Street also is registering relief that customers are in fact stepping up to the new and largely unproven service. “A year ago, people were very worried about whether the demand would actually show up,” Peck said. “But now they’re showing that they can put their money where their mouth is.” The lynchpin to XM’s continued growth will be its pact with General Motors to add XM-enabled tuners to the radios of GM cars. Peck estimates that 200,000-350,000 GM vehicles will roll off the line with XM capability this year. Hugh Panero, XM’s chief executive, said he expected new subscriber adds to be moderate in the first quarter, in line with the economy in general and the consumer electronics market in particular. But he predicted gains would begin to ramp up by summer, peaking in the fourth quarter. Company also insisted it has more than enough cash to last it through its critical growth phase in 2002, thanks in large part to a $164 million round of financing closed in the fourth quarter. As of Dec. 31, the company had $186 million in its coffers, down from $224 million a year earlier. Meanwhile, the XM announcement also gave a small boost to the shares of its archrival, Sirius Satellite Radio, which added 1.5%. Both stocks have risen in recent months as they overcame some of Wall Street’s long-running skepticism about consumer acceptance of the technology. However, XM has a headstart: Sirius is planning a limited launch to seven cities on Feb. 14, but national rollout won’t come until August.