XM Relaunches Financing Debate

XM's (XMSR Quote) cash grab Thursday turned up the volume on a long-running debate.

Once again, Wall Street finds itself weighing whether XM and rival Sirius (SIRI Quote) are about to emerge as a sparkling tech supernova -- or as a cash-crushing black hole.

Washington, D.C.-based pay radio shop XM said it sold 9.7 million shares Thursday, raising $300 million for the construction and launch of two new satellites. New York rival Sirius is expected to make its own trip to the financing window soon, as it faces big satellite costs of its own.

Satellite radios have clearly caught on with consumers. More than 5 million users have signed on for 100-plus channels of mostly commercial-free programming at around $13 a month. But even as the service becomes a big hit among listeners and a popular option on many new cars, the satellite radio business has yet to prove it can stand on its own.

At the end of last year, the two companies had lost a combined $4 billion since starting business. And it's not clear when -- or if -- the heavy losses will finally reverse. Analysts don't expect to see the companies swing to profitability within the next two years. On Thursday, XM dropped 64 cents to $31.19, and Sirius lost 7 cents to $5.76.

Still, the pro-satellite-radio argument remains bold: Cash is merely the booster fuel required to launch a big-growth mass-market business. Today, that logic is in even wider circulation. Fans say more cash now will lead to even faster growth down the road as satellite radio seeks to eat into the market now dominated by Apple's (AAPL Quote) iPod.

Both XM and Sirius are working on new radios that serve as both satellite receivers and portable storage devices for music and other audio playback. XM's Internet download strategy was partially revealed Tuesday when the company inked a deal with audio-books seller Audible (ADBL Quote).