XM Satellite Radio Holdings Stock Falls

My Way Finance: "XM Satellite Radio Holdings Stock Falls

Wednesday May 3, 5:53 PM EDT

LOS ANGELES, May 03, 2006 (AP Online via COMTEX) -- XM Satellite Radio Holdings Inc. stock fell Wednesday after competitor Sirius Satellite Radio Inc. announced it added more subscribers in the last quarter than XM.

Shares of XM fell 94 cents, or 5.1 percent, to close at $17.51 Wednesday on the Nasdaq Stock Market. Shares traded as low as $16.86, below the 52-week low of $18.42 set Tuesday.

Sirius shares fell 16 cents, or 3.3 percent, to close at $4.72 on the Nasdaq.

Sirius narrowed the subscriber gap between itself and XM Satellite with the addition of Howard Stern, progress with its original equipment manufacturer partners, and the introduction of portable devices, said Stuart Kagel, an analyst with Janco Partners Inc.

Tuesday, Sirius said it added 761,187 customers, ending the quarter with 4.07 million users.

On the other hand, XM Satellite added 568,900 users in the same three-month period. The Washington, D.C.-based satellite radio company said it remains on track to reach 9 million subscribers and positive cash flow from operations by year end. XM finished the first quarter with a total of 6.5 million subscribers.

XM Satellite last week said it lost $149.2 million, or 60 cents a share, on revenue of $208 million in the first quarter.

In the same period a year earlier, it lost $120 million, or 58 cents a share, on revenue of $103 million.

Analysts were expecting a loss of 55 cents a share, according to Thomson Financial.

Overall, analysts have been pleased with the growth in the adoption of satellite radio. The number of subscribers grew approximately 57 percent, according to analyst estimates.

On Wednesday, a law firm filed a lawsuit in U.S. District Court for the District of Columbia on behalf of all persons who acquired the stock of XM Satellite Radio between July 28, 2005, and Feb. 15, 2006.

The lawsuit alleges the company misrepresented its ability to reduce the costs of new subscribers as it reached its goal of six million subscribers by the end of 2005. The law firm said that, despite XM's knowledge that it would be making expenditures in the fourth quarter to achieve the subscriber goal, the company failed to disclose to the market that these costs would help lead to increased losses."